Education reimbursement tax treatment

[kv968]

My employer reimburses for educational expenses (i.e. college courses). The IRS has a limit of $5250/year and everything reimbursed after that is taxed as regular income.

If I were to itemize, would I be able to write that portion of the taxed reimbursement off? I've checked the IRS website but could only find how to write off educational expenses that weren't reimbursed.

I'm thinking that since it's money I'm getting for school, which I normally wouldn't be getting otherwise, that I can't. Yet if it's taxed as normal income then it seems as if I should be able to write it off as an educational expense

[kork13]

My (general) understanding is that any qualified education expenses paid by you that are not reimbursed by your employer can be deducted from your taxes. So you have $8000 in tuition fees, your employer reimburses $5000, you can claim $3000.

Unfortunately I don't know much about the IRS limit on reimbursements... I'm rationalizing here, so don't take it as gospel -- but if you are taxed on any reimbursements above $5250, (**correction** -->) you SHOULD be able to deduct it. I looked at IRS Form 8917, and it states that you must reduce your claim by the amount of TAX-FREE education assistance. So it sounds like if you are taxed on some of your employer reimbursement, you CAN claim that taxed portion as a deduction.

This is definitely something you should ask a tax expert about though... The tax difference could be significant depending on the specific situation, so you definitely don't want to follow guesses or rationalized answers.

Another consideration is how you claim your education expenses. You can do it as an actual tax deduction (Form 1040 Line #34 with Form 8917), or as a tax credit (1040 Line 49 with Form 8863). Often, taking it as the credit is more beneficial to you, so run the numbers on both and see which one is best for you.

[kv968]

Thanks Kork. It was just kind of a unique situation I couldn't find a definite answer to. Although I doubt I'll be itemizing this year anyway, I was just wondering how it worked. Like you, I'm coming with a lot of "should's".

And I forgot to add, the reimbursements I've receive so far (haven't gone over the $5250 limit yet but I will) have been tax-free. So going with that and what you said the IRS states about "reducing the claim by the amount of tax-free educational assistance" it sounds as if I could take it as a tax credit or deduction.