Employer tuition assistance to dependent child

Forum|Forum|1 year ago
January 28, 2025
2 replies
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I received 10k tuition assistance from my employer towards the tuition expenses of my dependent full-time undergraduate child. It was not reported on my W2. The employee assistance form says that the employee is responsible for paying taxes on the assistance amount. I guess $5250 of that tuition assistance is tax-free. Where do I report the remaining $4750 in Turbotax?

Thanks

SabrinaD2

The IRS may can allow up to $5,250 of employer-provided educational assistance to be tax-free annually. The remaining $4,750 is taxable income since it exceeds the exclusion limit and must be reported on your tax return.

Where to Report in TurboTax:

Log into TurboTax once signed in, click on the link in step 2
Navigate to Other Reportable Income
Select add other income
Follow the prompts to enter the $4,750 as "Taxable Tuition Assistance from Employer

sshegdeAuthor

Thank you for your response. It turned out that as per the assistance plan set up by my employer, all of the 10K is nontaxable for an undergraduate degree if the employee's total compensation is under 120K pa. Thanks again.

Hal_Al

Employee

What you describe is highly unusual. Your employer should have included the $4750 in box 1 of your W-2 and withheld FICA and income tax.

You said "I guess $5250 of that tuition assistance is tax-free." That may not be true. The fact that your employer is doing it wrong indicates that he may not have set up a qualified educational assistance plan. In which case, the $5250 is not eligible for exclusion The entire $10K may be taxable to you. Try to get clarification from your employer. Reference: https://www.law.cornell.edu/uscode/text/26/127

Either way, enter as described by @SabrinaD2 .

sshegdeAuthor

Thank You! I clarified with the benefits office. It turned out that all of the 10K assistance for the undergrad course is nontaxable if the employee's total compensation is under 120K pa.

Hal_Al

Employee

I'm not familiar with a rule about an employee's total compensation being under $120K . But, there is a rule that the total reimbursement amount is tax free if the course work is job related.