Education Tax credit

[JABear]

My son’s employer has agreed to pay his college tuition but they are a small company and they don’t want to open the tuition payment to all employees. Therefore, they added the cost of his tuition this last semester on his paycheck as income, he had payroll taxes taken out, and then they show a withdrawal of the same amount by them to send payment to the college. 
Will he receive a 1098-t from the college since his employer sent payment? And if he does, will he be able to write the cost of tuition off on his taxes. 
Need to know before the next semester if this is the best way for them to be doing this or if my son should just be paying the college directly?

[Anonymous_]

I'll page @Hal_Al 

[Bsch4477]

That issue was discussed here.

https://ttlc.intuit.com/community/college-education/discussion/am-i-eligible-for-the-american-opport...

[Hal_Al · Accepted solution]

Q. Will he receive a 1098-T from the college since his employer sent payment?

A. Yes, most likely.  That is, the school should still send out a 1098-T, in this situation. But, the schools don't always do things the right way.  

Q. Will he be able to write the cost of tuition off on his taxes?

A. Yes, since he has paid the tuition with what is his own after tax money.  That is, since the tuition was not paid with tax free employer assistance, he can use the amount paid to claim the tuition credit.

Q. Need to know before the next semester if this is the best way for them to be doing this or if my son should just be paying the college directly?

A. If the school does the 1098-T correctly, it shouldn't matter. But, some schools mistakenly show employer assistance in box 5 of the 1098-T, making it appear as if the tuition was paid by tax free scholarship.  So, simple answer is: your son should pay the college directly.  

[JABear]

One other question - his employer paid for college tuition last fall(2023) but did not put on his paycheck until Jan 2024. Can he claim the credit this year or does he have to wait until next year?

[Hal_Al · Accepted solution]

Q. His employer paid for college tuition last fall(2023) but did not put on his paycheck until Jan 2024. Can he claim the credit this year or does he have to wait until next year.

A. He claims it on his 2023 tax return, because that was the year that courses were taken AND the tuition was actually paid.