Is the course tuition fee paid by the PI hard funds taxable?

[TyZ]

In 2020, I participated in a graduate-level course to learn a new skill related to my lab working.
The Total tuition payment is $5566 (1098T-BOX1), which includes $5454 tuition cost and $112 other fees.

Two grants covered all of the $5566(1098T-BOX5) tuition cost.
1. $4908.6 was paid by Tax-free employer-provided assistance(90% of the $5454).
2. $657.4 (10% * $5454 + $112)was paid by the hard funds of my PI. 

https://wpici.psychiatry.upmc.com/ogc/NewStyle/Pages/Fiscal/FAQs.htm

Questions:
1. Is it tax-free when I paid the tuition fee by the hard funds?

2. Which amount I should input to the textbox of “What portion of the $5566 from Box 5 on 1098T is from veterans' benefits and/or tax-free employer-provided assistance?” (4908.6 or 5566)

3. If the hard funding was also tax-free, where should I input the 657.4.

4. Am I eligible for the Lifetime Learning Credit or Tuition Deduction since I did not pay any money for the course by myself?

[WendyN2 · Accepted solution]

1.  Yes, this tuition fee paid by the PI is tax free to you. 

2.  You should enter that it is tax-free employer-provided assistance as the employer is making an "investment" in you and thus they take that as an expense over time (or that is how they should be taking it but that has nothing to do with your taxes).

3.  The $657.40 should be entered in as expenses paid out by "you", but also reimbursed by the fund. This used to be pretty straight forward before the SD and ID change as you'd enter it into the "Miscellaneous - Other - Subject to 2% of your AGI" and it would get added to your itemized deductions (anything over 2% of your AGI). Given that this is a complete wash in and out, you should still enter it here as it will go as "informational purposes only" to the IRS, but really has no actual bearing on the bottom line of your taxable income as the amount is so small - and it nets out to zero anyway.

4.  No, since there was no cost to you, you would not receive any benefit from these potential credits. Reminder, too, that for the LLC, you should always refrain from using up one of your eligible years if the cost to you is minimal - you'd want to save them for a year where the cost is far greater as these years given do not have to be consecutive.