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March 5, 2020
Question

For my graduate education, my employer pays 100%. But, when I look at my 1098-T form, the payments I made is more than the scholarships listed. Should I get a tax break?

  • March 5, 2020
  • 2 replies
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The site is saying that I will, but I did not pay anything out of pocket.

2 replies

DawnC
Employee
March 5, 2020

If you did not pay anything out of pocket, you should not receive any education credits or deductions.  If your qualified expenses exceed the amount of your scholarships and other aid, TurboTax will generate a credit, which is why it is saying you get a credit.  But you should enter the additional aid not reported on your 1098-T in the education expenses section.  When you enter your expenses, you will come to a question that asks if you received any of the following:

 

  • Fellowships
  • Employer-provided assistance
  • Veteran's education benefits
  • Other tax-free aid

 

You should reports the amounts not included in Box 5 of your 1098-T here.  Once you do that and if your aid exceeds your education expenses, TurboTax will remove the credit.   You can type scholarships in the search box and use the Jump to link to be taken directly to the section where you should enter the amounts.  

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Hal_Al
Employee
March 5, 2020

It's a little complicated. There's pre tax reimbursement and after tax reimbursement.

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

 

 If you got more than $5250, the amount above $5250 is usually already included in box 1 of  your W-2 and you do not need to enter anything additional, about income,  on your tax return.  But, 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.

 

Schools don't always report employer payments, as scholarship,  in box 5 of the 1098-T.  You can not go by the 1098-T, alone. You must use all your records.  In your case,  it may be that they  were sophisticated enough to have only reported the tax free part  in box 5.