Employer reimbursed student loans

Forum|Forum|4 years ago
February 7, 2022
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I am doing my daughter's taxes who is a nurse. She is being reimbursed over a 3 year period for student loans she accumulated over her college career. In 2021 she received $5,000 and it was included in her W-2 as wages. Can she deduct the amount as a credit since it was not over $5,250? She did not work for this hospital when she was in college. What form does she use for the credit?

Best answer by Hal_Al

Q. Can she deduct the amount as a credit since it was not over $5,250?

A. No. There is no provision for the employee to take a deduction, on her tax return.

The new law allows the employer to exclude the money from the employee's W-2, so that she doesn't have to pay tax on it. She should go back to het employer and ask for a corrected W-2. It may be that the employer's reimbursement plan does not qualify for the exclusion, if it was set up prior to the new law. But it would be worth looking in to.

Reference: https://thecollegeinvestor.com/33583/employer-student-loan-assistance-tax-free/#:~:text=Section%202206%20of%20the%20CARES,both%20the%20employee%20and%20employer.

MinhT1

This is employer's help for student loans. The law now allows employers to pay up to $5,250 tax free to help employees pay student loans and tuition. The $5,000 should not be included in her wages to be taxed. She should contact her employer for a corrected form W-2.

@Ibantwine I have edited my answer.

[Edited 02/07/2022 | 10:04AM PST}

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