topic What is "tax free employer tuition assistance" and what qualifies for it? in Education

What is "tax free employer tuition assistance" and what qualifies for it?

maryisbadatmath — Thu, 06 Jun 2019 08:30:16 GMT

I don't understand "tax free employer provided assistance" question as I'm completing the information for my 1098t.

What is tax free employer provided assistance?

I received a Pell Grant, Tuition Aid Grant, Federal Loans (direct, unsub, and parent), and New Presidential Scholar. With this I still had to pay some money to go to school.

The question asks what portion was tax free employer provided assistance for Box B of my 1098t and I don't know what is the correct answer.

Tax-free employer assistance is money your employer gave...

CarolC — Thu, 06 Jun 2019 08:30:17 GMT

Tax-free employer assistance is money your employer gave you to pay for your higher education expenses. If your employer provided this benefit, and you didn't pay tax on these funds, then select Yes to this question. If not, answer No.

See this TurboTax article Deduction for Higher Education for additional information.

Re: Tax-free employer assistance is money your employer gave...

TyMurr — Wed, 19 Feb 2020 01:48:42 GMT

What if my parent’s employer provided dependent free employer tuition. So not my employer, my parent’s employer?

Re: What is "tax free employer tuition assistance" and what qualifies for it?

JulieS — Wed, 19 Feb 2020 19:06:17 GMT

Yes, it is still employer assistance even if it is not your employer.

Re: What is "tax free employer tuition assistance" and what qualifies for it?

aprom3 — Wed, 25 Mar 2020 19:25:42 GMT

Good afternoon! I have a question related to this matter. I am doing a graduate fellowship with a company, which means I am working for them part time to fulfill some of the credits of my master's degree. As part of this fellowship, the company is paying for my tuition. The amount they paid is included in box 12 on my 1098-T. They paid the money directly to the school. It was never actually given to me. Does that mean it is considered "tax free employer tuition assistance"? Thanks!

Re: What is "tax free employer tuition assistance" and what qualifies for it?

AmyC — Wed, 25 Mar 2020 19:39:40 GMT

This may help, Solved: How to tell if Employer Provided Tuition Assistance is ...

@aprom3 If the link does not answer your question, could you clarify since box 12 does not exist on a 1098T. It would not go on box 12 of your W2. How much is showing where?

Re: What is "tax free employer tuition assistance" and what qualifies for it?

aprom3 — Wed, 25 Mar 2020 19:47:39 GMT

My apologies for the confusion. The amount my employer paid for my schooling is included on form 1098T in box 5. It is not included on my W2. Thanks!

Re: What is "tax free employer tuition assistance" and what qualifies for it?

ThomasM125 — Wed, 25 Mar 2020 20:27:04 GMT

It would be considered tax free employer assistance if it was not included in your wage income as reported on your W-2 form.

Re: What is "tax free employer tuition assistance" and what qualifies for it?

jcqlnmartinez5 — Mon, 11 May 2020 06:39:01 GMT

What if the university provided scholarship funds for my education in exchange for being a teaching assitant at the university would this be considered tax free?

Re: What is "tax free employer tuition assistance" and what qualifies for it?

CatinaT1 — Mon, 11 May 2020 13:07:23 GMT

As long as what they provided was a scholarship and the money was used for tuition it would be considered tax free.

Re: What is "tax free employer tuition assistance" and what qualifies for it?

Carl — Mon, 11 May 2020 15:33:03 GMT

In a nutshell.

All monies received from "ANY" source for "qualified" education expenses is treated as taxable income *INITIALLY*. It's taxability is offset by the "QUALIFIED" education expenses it is used to pay for.

So if employer provided assistance is included in box 5 of the 1098-T and is *NOT* included in box 1 of your W-2, then treat it *EXACTLY* like a scholarship. As far as the school is concerned, that's what it is. Otherwise, they would not have included it in box 5 of the 1098-T.

Re: What is "tax free employer tuition assistance" and what qualifies for it?

T4Tax — Wed, 12 May 2021 15:47:53 GMT

What if the university provided $4,000 in scholarship funds (1098-T has $4000 in Box 5) to my daughter for working for one of the university's sports teams. She did not receive a W-2 and the money was put directly into her account at the university cashier/bursar. I have entered the 1098-T information in Turbo Tax including over $9,000 from Box 1 and the next question is asking about tax free benefits. Is this $4,000 considered tax-free employer provided assistance? Would I answer Yes, she received this help to pay for school?

Re: What is "tax free employer tuition assistance" and what qualifies for it?

AmyC — Wed, 12 May 2021 19:05:27 GMT

No, employers can provide employees with tuition assistance that is not accounted for on the w2. The work benefit is accounted for on the 1098-T you received.

@T4Tax

Re: What is "tax free employer tuition assistance" and what qualifies for it?

T4Tax — Wed, 12 May 2021 19:22:26 GMT

So is this $4,000 considered tax free since it is scholarship funds received and in Box 5 of the 1098-T, but just not considered tax free employer tuition assistance? She is a full time student and her work was for the university. I entered the amounts directly from the 1098-T and want to make sure I handle the $4,000 and the scholarship questions correctly.

Re: What is "tax free employer tuition assistance" and what qualifies for it?

ThomasM125 — Sun, 16 May 2021 11:58:51 GMT

@T4Tax If the $4,000 reported on the 1098-T form represented money or other consideration paid to the student primarily for services rendered to the school, then it would be tax-free employer assistance and you should indicate that in TurboTax.

However, If the services she provided were primarily for her education, then the compensation would be considered scholarship income and would not qualify as tax-fee employer education assistance.

Re: What is "tax free employer tuition assistance" and what qualifies for it?

Hal_Al — Sun, 16 May 2021 12:19:23 GMT

Don't get bogged down in wording. If it's in box 5 of the 1098-T, it's "scholarship" for purposes of the tax rules.

If you entered it at the 1098-T screen, answer no to the follow up question about employer assistance. Don't enter the amount again.

Re: Tax-free employer assistance is money your employer gave...

Shannonwhite79 — Mon, 09 Jun 2025 17:11:22 GMT

Is the “employer” the university in this case? On my students 1098T, box 1 is $14003.83 & box 5 is $28285.
Thank you for your time & help~

Re: Tax-free employer assistance is money your employer gave...

JotikaT2 — Tue, 10 Jun 2025 23:17:57 GMT

Box 5 is comprised of scholarships and grants, and it would not necessarily be considered the employer. But if there are excess scholarship funds that were not used for tuition, then the university would show as being the issuer of the income on your wages on Form 1040.

Please see are my scholarships, fellowships, or grants taxable for more details.

@Shannonwhite79