Employee Tuition Remission - is it "Tax Free" employer provided assistance for 2021?

Forum|Forum|3 years ago
April 16, 2022
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Hello,

I started working at my University for graduate program's employee tuition remission in 2019.

Since then, I definitely received more than $5250 (tax free amount) in 2020 so the tuition remission I received for 2021 is all taxable income.

Since it's taxable income (I received total of $8,597.50 in taxable fringe benefits and added to my income in W2 I believe), would I say "NO" to the question to "did you receive any of the following tax-free benefits last year?" or still say Yes to that?

Not A Product Question

Hal_Al

Employee

Q. Do I say "NO" to the question to "did you receive any of the following tax-free benefits last year?"

A. Yes, you say No.

Even though the university is your employer, you do not have "employer assistance", for tax purposes. Tuition remission is a separate category, for tax purposes, and is totally tax free (not just the first $5250). This is even more true, since the school has included the remission amount, as scholarship, in box 5 of the 1098-T.

The $302 difference between boxes 5 and 1could be considered taxable unless you used for other qualified expenses (books and course materials).

You may not claim a tuition credit, since your tuition was paid by a tax free benefit.

cheeleahAuthor

Got it, thank you for explaining that.

I was qualified for Lifetime Learning Credit , does that sound right to you?You mentioned that I may not claim tuition credit ( I already had 4 years of opportunity credit and TurboTax put me on lifetime learning credit).

Also, wondering if below is the right amount to include below:

Amount from 2021 Earning statement:

THANK YOU SO MUCH!

Hal_Al

Employee

I did not realize that this "tuition remission" had been reported to you on an "earnings statement" and I assume a W-2 as well.

In that case you should be eligible for a tuition credit. But, it's not clear what the $11,182 in box 5 of the 1098-T is and where the $5250 is accounted for and is the W-2 the only place the $8598 is shown.

As to your original question. Do I say "NO" to the question to "did you receive any of the following tax-free benefits last year?"

Answer no if the $5250 is already in box 5 of the 1098-T or the box 1 amount was reduced by $5250. You do not report the $8598 a employer assistance because it is taxable income to you.