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Question: My employer paid my tuition reimbursement in excess of $8950 which is all taxable income, what do I need to do?

My employer paid my tuition reimbursement in excess of $8950 which is ALL taxable(overage of the $5250 non taxable allotment). If I use Turbo Tax to do my own taxes, how do I guarantee that I will do this properly? Even though I never technically was given this money as extra income, can I still claim this as tuition I paid? I think it's called the Hope Credit.

Answer: The $5,250 that you were reimbursed by your employer for tuition and fees cannot be used to generate a tuition and fees deduction or lifetime learning credit.

You can take education tax benefits for any tuition and fees paid by your employer that are included in your W-2. This should be all amounts paid in excess of $5,250.

You can also take education tax benefits for tuition and feew you paid out of your own pocket.

You probably do not qualify for the HOPE credit because this requires you to be a full-time student and less then 2 years out of high school.

The lifetime learning credit is claimed on form 8863 and the tuition and fees deduction is claimed on form 8917. You can choose to take one of the other, but not both. If your income is too high, you will not qualify for the education benefits.

If you itemize your deductions, there may be some additional benefits.

Richard K
Master Tax Advisor
Enrolled Agent

This advice was based upon my understanding of the tax law in effect at the time it was written as it applies to the facts described by you.
See my profile for more information.

Le Mensuel d’AGEFI Luxembourg

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