How to fill 1098-T if employer paid for a part of tuition, and I paid for the rest?

[anonymous20]

I was at least half-time enrolled in an educational program this year, and my employer paid for 80% of the program. I first paid for the expenses on my personal account, and upon proving to my employer that I had passed the course, my employer reimbursed me, up to ___$.

I am not sure how to acknowledge the reimbursed amount vs. the remaining amount I paid. In addition to my remaining amount, I also covered textbook fees. 

I was enrolled in the same program last year (without employer reimbursement) and qualified for a return.

Please advise, thank you.

[Hal_Al]

 Usually, you may not claim a tuition credit for expenses paid (or reimbursed ) by tax free money (e.g. scholarships, grants, VA benefits or employer reimbursement). Employers are allowed to reimburse employees up to $5250 tax free. Anything over that is taxable and included as taxable income on your W-2. So, any expenses over $5250, including books, may be used to claim a tuition credit. 

But, you have a choice (actually a tax loop hole). You may choose to include any of the $5250 (normally tax free) reimbursement as taxable income. Since taxed income is considered your money, you can use that amount to claim the education credit. 

It may get a little complicated reporting the now taxable reimbursement correctly. It's best explained by example. Lets say you paid $6000 in tuition, in 2016, and use $4000 of that to claim the tuition credit ($4000 is all you need to get the maximum amount of credit on the American Opportunity Credit).
Your employer reimburses you $6000. On your 2016 W-2, he shows $5250 (the maximum allowed) of tax free educational reimbursement and $750 of taxable reimbursement. $750 will have already been included  in box 1 of your W-2 as taxable income. You now have to report $3250 (4000-750) as additional taxable income on your 2016 return. $3250 goes on line 21  of form 1040 as "Taxable Reimbursement". TurboTax can not automatically pull that from your w-2. You have to enter it manually. In TurboTax enter at::

Federal Taxes Tab
Wages and income

Scroll down to:
--less common income
---Misc Income, 1099-A, 1099-C..... (Press start)
----On the next screen, select Other reportable income 
-----Two screens in, type Tuition reimbursement  and $3250

Alternatively (using the numbers in the example), you can use only $750 to claim the tuition credit in 2016.  "How do you fill out the 1998-T?" You enter the 1098-T, exactly as shown. Later, in the education interview, you will be asked if you got any employer reimbursement.

[iheartverde]

So I am trying to understand this.  So the situation is that your company reimburses you partially for college tuition.  (You pay all of it with your money and then are reimbursed partially.) So you are saying that tuition is say $6,000 total and then the hypothetical $4,000 tuition credit claim that you are talking about. If I read it correctly the $4000 is the amount that they reimburse you in your paycheck. (How can we tell if that reimbursement was taxed in your paycheck and does that effect anything?) 

So the $750 that you are talking about for box 1 is the portion that is the "taxable education reimbursement".  So that is the amount over the $5250 maximum reimbursement cap that your employer gave you in your paycheck right? And that is not already specified in your W-2?  And you then add that amount to line 21 of the 1040 form called "Taxable Reimbursements".  Am I understanding this correctly?

What about the additional $2,000 of tuition that you paid on your own without reimbursement? Where do you list the amount of tuition that you paid on your own? Would you then change the amount on the 1098-T form in box 1 to the amount that was not reimbursed or should that amount stay as listed on the 1098-T form that was mailed out from the university?