Tuition Remission and W2

Forum|Forum|2 years ago
April 4, 2024
1 reply
0 views

I am a full-time professor at a University in PA. Since Spring 2023, I have been using my employee benefit to pursue another master's degree. The university has already issued a 1098-T form, and its box 5 Scholarships or grants and box 1 are valued at the amount of tuition remission I obtained. However, my 2023 W-2 form doesn't include the tuition remission I received beyond $5,250. If my understanding is correct, the portion of graduate tuition remission is subject to federal tax.

I have already entered all the forms into Turbotax to prepare my 2023 tax return. I checked the box for free-employer-provided educational assistance and claimed $5,250. However, Turbotax still doesn't correctly reflect the amount of tax related to the tuition remission. How should I correctly report this and claim the $5,250 deductible by using Turbotax deluxe? As a PA resident, do I still need to pay state tax for the graduate tuition remission?

WPAAuthor

To clarify my situation, I work and study at the same university. Both boxes 1 and 5 of Form 1098-T have the same value.

Vanessa A

There are different types of employer education benefits that fall under different tax codes.

Since your employer included your full tuition in box 5 as a scholarship, it is likely they are using code 26 U.S. Code § 117 - Qualified scholarships. So if box 1 and box 5 are equal, you would not have any taxable scholarship income.

There is also code 132D Qualified Employee Discount which are non taxable fringe benefits.

In both of these situations, the benefit is not limited to $5,250.

If they are using either of the above codes, then you would not have to pay PA tax on the scholarship or tuition discount.

For both of these situations, you also would not include anything else on your tax return related to the tuition, other than the 1098-T. At the same time, you cannot take any education credits for tuition that was fully paid by scholarships.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"