Q. should they be taxing the total: $8323.60?
A. No. Only the amount over ($3073.60) is subject to tax.
If your employer over withholds, you'll get it back at tax filing time.
That said, the statement "I'm paying last year's taxes this year on my paycheck each month" doesn't make sense, unless they paid your 2019 reimbursement in 2020. Be aware, that may jeopardize the tax status of any reimbursement for 2020 tuition. The IRS goes by calendar/tax year not academic year. If your employer reimbursed you in 2020 for 2019 tuition, for tax purposes it's treated as 2020 income. That is, if your employer reimburses you, in 2020, for both 2019 and 2020 tuition, only $5250 will be tax free (not 5250 x 2 = 10,500).
