Employer Paid Tuition and Income Taxes?

Question

My employer paid tuition for a graduate-level course I had taken in 2006. I took a position in another company late last year and, in accordance with my previous employer's policy, I will pay the tuition back to my previous employer this month. Once I make this payment, for tax purposes, have I officially paid my own tuition for this course? Can I consider this tuition payment for my 2006 or 2007 income taxes?

Answer 1

Since you are not enrolled in the course in 2007, you are not a qualifying student in 2007. You were enrolled in 2006 and the expenses were incurred in 2006. Your employer paid the tuition with the contingency that you would remain at your former job. This was like a loan which you now have to repay, since you did not meet the contingency. When money is borrowed for education, the deduction or credit is taken at the time the money is borrowed, not when it is paid back.

File or amend your 2006 return and deduct the tuition and fees as an adjustment to income, take the Lifetime Learning Credit, or take a deduction on Schedule A for unreimbursed employee expenses, as applicable.

Answer 2

The answer is yes. You will be able to claim this on your 2007 return, as that will be the year that you paid it.

Answer 3

Call 1-800-829-1040, do not input any information from the prompts and when the assistor answers ask for tax law.

Answer 4

Yes

Answer 5

I believe it depends on circumstances. Does your employer require you to take the courses as a condition of employment. If so, then it is not taxable.