If I understand correctly, you can receive up to $5,000 in employer-paid-for school tuition but may have to pay taxes on anything beyond $5,000.
And then there’s something about whether it’s a “qualified” education reimbursement/employer-paid-for program or not qualified. I do not know whether this is a qualified program or not.
Now, however, since the amount of tuition reimbursement I got last year (I received a Form 1098-T or some form like that) was less than $5,000 in any case, would this mean that it’s kind of irrelevant whether it was a “qualified” program or not, and I wouldn’t have to report the $5,000 regardless (it only matters for tax purposes, if $5k was exceeded, but makes no difference if it was less than $5k?)
Yeah, I am a layman… This confuses me.
Qualified tuition generally means classes eligible for college credit at an accredited US-based university eligible for federal financial aid. I’d have to check the fine print to see if it has a different definition as an employee benefit, but I think that’s probably the one in use. The qualified test would apply regardless of the amount reimbursed.
If you got a 1098-T, that’s a good sign that the tuition was qualified.
As for reporting income, it should have been done correctly at the employer level so that your W-2 will already show any taxable amounts. If the employer did something incorrectly, you’d want to first try to get them to fix the W-2
As long as it’s less than $5250 (for 2014), no, you do not include it as taxable income. See Pub. 970, ch. 11. However, you can only claim a tuition deduction or tax credit on the portion of your tuition that your employer didn’t reimburse you for, if any.
This confuses me.