How do I file tuition money on my taxes?

Tuition reimbursement and taxes?

• My wife took the grad classes this year, we paid for them in full out of our pockets, once the class was complete her employer reimbursed her for some of the cost (not all of the cost). I figured the reimbursement would be on some separate line of the W2 such as line 14, in which case I would enter the 1098T values and then subtract the reimbursement. However, this is not the case. I'm guessing the reimbursement is just part of her wages, which would mean its taxed income? Since its taxed income I'm not sure if I'm supposed to just enter my 1098T values and not enter the reimbursement. Or if I enter the 1098T minus the reimbursements (which I will have to have her look up). The second just doesn't seem correct since I got taxed on the money I used to pay the bill and then I get taxed again on the money I get back as reimbursement? Which is double taxes. So my thought is the reimbursement is just considered income and I can deduct the full cost from the 1098T? Or am I wrong? I'm thinking this cause if we were ever audited and the reimbursement was part of income how would the IRS ever know we even got a reimbursement? If it was on a separate line and the value is not accounted for within your taxes I could imagine the IRS being able to trace the amount down and figure out I was suppose to deduct that number from my total tuition deduction, etc.... So what should I do and what are the actual rules? I don't want to assume and file incorrectly and get audited and possibly hit with fines. But I also don't want to pay a bunch extra in taxes that I could have deducted rightfully or w/ out risk of getting a penalty.

• Answer:

  Generally speaking reimb. are not taxable up to a certain amount. If it doesn't appear on the W-2 then you must not have exceeded that amount. I would ignore the 1098T all together and just go back and track the difference between the checks you wrote and the amounts you received in reimbursements. Example: you paid $5,000 in tuition and you go back through your check stubs and find you received $4,000 in reimbursements then I'd claim a $1,000 as education expenses. I guess I would be sure it doesn't exceed what's on the 1098 but if it does someone really screwed up.