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You are correct in that you can receive up to $5,250 tax free from your employer for qualifying education expenses. But what that means is that your employer should not report that amount as taxable on your W-2 form, in box 1. So, you don't add the $1,479 to your income on which you have to pay taxes. You aren't due a refund of the $1,479, it just shouldn't be listed as taxable income on your tax return.
Hi, my employer did not included it on Box 1 on my W-2, I added it myself. When I was adding my college information I was asked if I received “employer assistance”, I said yes and added the $1,479.39. Did I do it wrong?
You said " Box 1 on 1098 T is 5,535, and Box 2 is 4,215". Did you mean box 5 was $4215? Does the $4215 include the $1479 from your employer? It shouldn't, but colleges sometimes do include it, if the employer sent the money directly to the college.
Yes, when asked if you received “employer assistance”, in the TurboTax education expenses/1098-T interview you should answer yes and enter the $1,479. You did not do wrong. The $1479 was tax free assistance, just like a scholarship and it reduces the amount of expenses that qualify you for a tuition credit. $4215 of scholarship in box 5 + $1479 of employer assistance = $5694. Since this is more than the $5535 in box1, you do not qualify for a tax credit. So, yes, you will not be getting any money back, on your tax return.
Q. Am I doing something wrong?
A. No. You entered everything right. You're misunderstanding what the $5250 tax free is. Your employer only gave you $1479. So only $1479 was tax free. The $4215 separate scholarship is also tax free because it was used to pay for qualified expenses (tuition).
Using an example: What if your employer gave you $6000 (instead of $1479). The first $5250 would be tax free, but the other $750 would be reported/included in box 1 of your W-2 as taxable income.
I assume the $4215 came from the college (or someone else, but not your employer).
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