Yes, you have discovered the tax loop hole. You have a choice. You can claim nothing on your 2017 tax return, since it will be
reimbursed in 2018. Or, you can claim a tuition credit, because you are out-of-pocket.
It may get a little
complicated reporting the 2018 reimbursement correctly. It's best explained by
example. Lets say you paid $6000 in tuition, in 2017, and use $4000 of that to
claim the tuition credit ($4000 is all you need to get the maximum amount of
credit on the American Opportunity Credit).
In 2018 you employer reimburses you $6000. On your 2018 W-2 (received in Jan
2019), he shows $5250 (the maximum allowed) of tax free educational
reimbursement and $750 of taxable reimbursement. $750 will have already been
included in box
1 of your W-2 as taxable income. You now have to report $3250
(4000-750) as additional taxable income on your 2018 return. $3250 goes on line
21 of form 1040 as "Taxable Reimbursement". TurboTax can
not automatically pull that from your w-2. You have to enter it manually. In
TurboTax enter at::
Federal Taxes Tab
Wages and income
Scroll down to:
--less common income
---Misc Income, 1099-A, 1099-C..... (Press start)
----On the next screen, select Other reportable income
-----Two screens in, type Tuition reimbursement and $3250
Alternatively (using the
numbers in the example), you can use only $750 to claim the tuition credit in
2017. Then, you will have to do nothing with your 2018 return.
