Should I pick Y/N. I was given Employee tuition assistance ($2904). It's included in my 1098-T. how do I know if any of that amount has been reported as income on my W-2?

Forum|Forum|6 years ago
June 1, 2019
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MichaelMc

Employee

Based on the facts and circumstances in your question, the amount of tuition assistance should be non-taxable and should not have been reported on your Form W-2.

Amounts received by an employee under a written educational assistance plan are excluded from taxable income, up to $5,250 per year.

The amount received should not be included in Box 1 of Form W-2.

The general rule is that no "double benefits" are allowed. You may still be able to claim some portion of the American Opportunity Tax Credit or the Lifetime Learning Credit. However, the amount reported in Box 1 of Form 1098-T must be reduced by the amount of any tax-free educational assistance received from your employer.

For more information, please see IRS Pub. 970 Tax Benefits for Education.

leoisillon

I have a question along the same lines, however slightly different. I used my employee benefit for education assistance at $5250 in 2019. My employer will pay up to 10k total and anything over $5250 is subject to income tax. I'm paying last year's taxes this year on my paycheck each month (bi weekly). I'm wondering if they tax the entire amount used as assistance or only what I went over the $5250. It seems like it's the former. I'm being taxed around $2200 total.

I used all $5250 and went over by $3,073.60.

Question is- should they be taxing the total: $8323.60?

Makes it a bit outrageous and not want to go over $5250 if they are taxing the whole thing as income. I don't know at what rate, but it has to to be at least 25% or more.

I appreciate any help you can offer.

Hal_Al

Employee

Q. should they be taxing the total: $8323.60?

A. No. Only the amount over ($3073.60) is subject to tax.

If your employer over withholds, you'll get it back at tax filing time.

That said, the statement "I'm paying last year's taxes this year on my paycheck each month" doesn't make sense, unless they paid your 2019 reimbursement in 2020. Be aware, that may jeopardize the tax status of any reimbursement for 2020 tuition. The IRS goes by calendar/tax year not academic year. If your employer reimbursed you in 2020 for 2019 tuition, for tax purposes it's treated as 2020 income. That is, if your employer reimburses you, in 2020, for both 2019 and 2020 tuition, only $5250 will be tax free (not 5250 x 2 = 10,500).