Lifetime Learning Credit / 1099-T Form

Forum|Forum|2 years ago
February 14, 2024
2 replies
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I have a question, I recently go into a graduate program where my company pays through the Educational Scholar Program (ESP). I still received the 1099-T form from my university in my name. I'm confused if I can/have to report my 1099-T form since my company pays for the classes (Unless I leave or get fired which then I have to pay it myself).

I did an IRS survey with theses results in the attached pictures. Also ESP deemed the class Non-Taxable

In that case can I report my 1099-T form and obtain the LLC benefit?

Not A Product Question

AmyC

Employee

You only get a tax credit when you spend your money that has been taxed. Since you did not spend your money, there is no tax credit.

The IRS states:

Expenses Cannot Be Paid with Tax-Free Funds

You cannot claim a credit for education expenses paid with tax-free funds. You must reduce the amount of expenses paid with tax-free grants, scholarships and fellowships and other tax-free education help.

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Hal_Al

Employee

Q. Can I or do I have to report my 1098-T form?

A. No.

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly you have taxable scholarship income. So, you only enter it if you know one of those is true.

If you claim the tuition credit, you do need to report that you got one or that you qualify for an exception (the TurboTax interview will handle this).

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 any additional income on your tax return. Since you have essentially paid tax on that part, it is considered your after tax money and that amount (above $5250) can be used to claim the tuition credit.

VegaYomarAuthor

In this case the class cost 8K but it was deemed Non-Taxable. So in that case I don't report it correct?

Hal_Al

Employee

Q. In this case the class cost 8K but it was deemed Non-Taxable. So in that case I don't report it correct?

A. That's correct.

Q. But if the limit is $5250, how do they get to say it's not taxable?

A. If they determine, under IRS rules, that the education/training helps improve the employee's current job skills, they can declare it as a business expenses (as opposed to just being tuition reimbursement).

Reference: https://www.irs.gov/pub/irs-pdf/p5137.pdf