Taxable tuition remission is not being added to education expenses

Forum|Forum|4 years ago
February 7, 2022
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Employer pays for graduate tuition , but the amounts above $5250 are taxable income and they've been collecting the taxes for these amounts during the year. The taxable amount $8970 is reflected in Box 14 of W2 as Tuition.

1098-T Box 1 is $14570 ($350 fees). Box 5 shows $14220 (tuition)

Reconciliation of Box 5 in TT shows:

Box A - 5250

Box B - 8970

Box C - 0

Box D - unchecked

I had books/supplies of $140

Student Information Worksheet Adjusted Qualified Expenses show $9460 - it does not reflect the taxable portion of the tuition remission.

The step-by-step 1098-T asks if received tax-free benefits, for which I say yes and the amount is $5250. It then if any amounts were included as income, for which I entered $8970

In the end it calculates for me a LLC as $1892 based on the aforementioned adjusted qualified expenses.

I think this is a bug or error in the calculations based on my input. Any ideas?

Hal_Al

Employee

You said "In the end it calculates for me a LLC as $1892".

That's the correct amount, although Books are only a qualified expense if purchased from the school.

$14570 + 140 - 5250 = 9460 Total qualified expenses. $9460 x 20% =$1892.

I'm of the opinion that the school made a mistake including the $8970 in box 5 of the 1098-T. The simplest thing to do is change it to $5250 when you enter the 1098-T. But apparently the TurboTax interview handled it, when you entered the correct info.

su_A_veAuthor

The 1098-T the school sent shows $14220.

As part of the interview process, I specified that $5250 was tax-free, and the rest $8970 was taxable already entered in W2.

So the 8970 is just income, for which I pay taxes. I then spent that 8970 in tuition (plus the 140 in books) so the total expenses are indeed $9460. Therefore the qualified expenses is correct?