Employer Tuition Reimbursement and Lifetime Learning Credit

Forum|Forum|4 years ago
March 20, 2022
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I received a 1098-T from my university for the tuition I paid in 2021. My employer did not reimburse me for my tuition until January 2022, so I received no employer tuition reimbursement in 2021 only 2022. When looking to see if I qualify for the Lifetime Learning Credit, should I be entering the amount I was reimbursed in 2022 for my 2021 tuition in the scholarship/grant? Or because I wasn't reimbursed during the 2021 year, I can claim the Lifetime Learning Credit?

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Hal_Al

Employee

Q. I paid tuition in 2021. My employer did not reimburse me for my tuition until January 2022. Should I be entering the amount I was reimbursed in 2022 for my 2021 tuition?

A. Simple answer yes, particularly if you have already received that reimbursement before you have filed your 2021 tax return. Even if you haven't yet received it, but are expecting it. you should not claim a credit.

By law your employer can only give you $5250 maximum, tax free. If your tuition was less than that, and your employer will reimburse it all; it’s safe to assume you cannot claim the credit. You do not even need to enter your 1098-T. You have nothing to claim.

If you got (or will get) more than $5250, the amount above $5250 is usually already (or will be) included in box 1 of your w-2. Since you have essentially paid tax on that part, it is considered your after tax money and that amount can be used to claim the tuition credit.