Hi everyone, I'm hoping to get some help here. I'm a bit frazzled and unsure on how to enter this situation into TurboTax. I'll try my best explaining the scenario.
My employer pays for the tuition for my graduate program. What happens is at the beginning of each term, the school provides me with a balance, and my employer provides the school with a voucher that is a promise to pay if I meet a certain letter grade. At the end of the course, assuming I got a B, my employer will pay the school directly and then add that amount to next paycheck and tax me for anything over the tax-free $5250.
So for 2020, I took 4 quarters which cost $6000 each. So on my 1098-T box 1 shows $24,000. The problem is that box 5 also shows $24,000. Because my employer initially provides a voucher and does not make payment until the quarter has completed, they only paid $18,000, and I have paid $12,750 in taxes (first $5,250 was tax free) during 2020. I believe the school's records consider the voucher as payment, because once it is received, my balance is reduced. Should I enter Box 5 into TurboTax using $18,000 since my employer records show that was the amount paid? Seems like if I leave it at $24,000 I'll be paying taxes that I shouldn't be paying.
So when it comes to inputting into TurboTax, I put in the 1098-T information and also stated that the actual tuition paid was $18,000. The next question asks me "Did I receive any of the following tax-free benefits last year? ex. Tax-free employer provided assistance". Should the answer be yes or no? and if the answer is yes, it asks what portion of the $24,000 from box 5 on my 1098-T is from tax-free employer provided assistance. Should the answer be $5250?
The next question is "was any of the financial aid already included as income?" I take it this answer should be Yes, but I'm not sure about the amount. It asks "How much of the $24,000 received in aid was already reported on the W-2. I believe I should put in $12,750 for this box since that was the taxable amount added to my income, but I'm just asking to double check.
Thanks in advance,
Andrew
