Hi @Hal_Al ,
I have a similar situation to the hospital example provided by another user and I have a few questions…
In 2021, I paid $9000 in tuition and fees (reported on 1098). This was the only year of recent education (obtained masters degree). I received two employer tuition reimbursements: one in 2021 for $4180, the other in January 2022 for $4530. None of these tuition reimbursements appear on my W-2s for either 2021 nor 2022. I took the lifetime learning credit in 2021 and received a credit amount of $964. For 2022 taxes, I calculated $906 in education credit recapture tax. After filing my 2022 taxes, I received a check from the IRS in the exact amount of $906, presumably a refund of the recapture tax. The subsequent letter from the IRS stated I had overpaid taxes. I have cashed this check and set aside the money.
My questions are…
A. The two tuition reimbursements from my employer are both tax free because I received each of them in separate tax years and each reimbursement is under the $5250 threshold, correct?
B. Because I received the 2022 reimbursement that was for 2021 tuition, I must re-calculate the lifetime learning credit and pay education recapture tax, right?
C. If the answer to B is yes, what should I do with a $906 I received from the IRS after I filed my 2022 taxes? Should I keep it or should I use the online IRS system to pay it back?
Thanks in advance for your help!
