Education reimbursement repayment

Forum|Forum|4 years ago
November 30, 2021
2 replies
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I am currently pursuing a graduate degree while being employed. For this my employer gave me education reimbursement in excess of $5250 (non taxable) amount such as $15,000. The reimbursement amount is captured on W2 and taxes paid on amount was $15000 - $5250. (I had paid tuition money to the university myself and received reimbursement from the company for the above amount). Based on my family MAGI - not eligible for any education credits. My employer has a requirement of staying with the company for 24 months after completing graduate program.

I had to leave the company due to life circumstances before this 24 month period ended and had to repay the full amount received to my employer. How can I get back the taxes that were deducted and paid directly to IRS ?

Thank you

Not A Product Question

DoninGA

Employee

If the amount repaid was more than $3,000 you can claim an itemized deduction on Schedule A for the amount repaid or you can calculate a credit to be entered on Form 1040.

Go to IRS Form 525 Taxable and Nontaxable Income on page 36 for Repayments - https://www.irs.gov/pub/irs-pdf/p525.pdf#page=36

If claiming a credit also see IRS Form 1040 Schedule 3 line 12d instructions page 104 - https://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=104

Hal_Al

Employee

Repayments. This situation is described in IRS Publication 525. If the amount is more than $3000, you can take a itemized deduction, on line 16 of schedule A (not subject to the old 2% of AGI rule) or you can take a credit. The credit is computed by re-figuring the tax from the previous year as if the income had not been received. Then the difference in tax is claimed as a credit on the current year's return. TT does not do the credit calculation or compare it to the alternate deduction. You have to do that manually. You enter the credit in the forms mode* (the forms mode is not available in the on-line versions of TurboTax [TT]).

This assumes you repaid the money, this year, for reimbursement received in a prior year. If the repayment is done in the same year, your W-2 should reflect the revised amount.

*All entries that seem like you should be able to enter on Form 1040 or Schedules 1 through 3 have to be entered on TurboTax's 1040 Worksheet. Scroll way down to Other Credits and Payments Smart Worksheet. Select item E, claim of right under IRC 1341 for repayments. It ends up on line 12d of schedule 3 (2020 forms and worksheets). It's not clear yet if this will work for the 2021 software. It appears the credit will go on line 13z of the 2021 Schedule 3.