My employer paid my tuition in 2015 and 2016. In 2016 they missed two payments but when I filed my taxes I only claimed my actual out of pocket expenses ($788). In 2016 they made up the two payments and now Block 5 of my 1098 is showing that my scholarships were $1800 more than my expenses. Unfortunately, this isn’t true as I also had $500 in actual expenses that now I can’t claim because the tax software says this is a taxable scholarship?
Also, the tax software says do not enter in employer reimbursed/paid amounts in block 5 but will the IRS flag my return if I leave it blank since block 5 is now more than block 2? I feel like I’m being asked to pay taxes on something if had they been paid in the right year would have been non taxable.
Since I can’t claim tuition and fees deduction anyway do I even have to report the 1098T. I’m just worried that the IRS will flag it when they see Box 5 greater than Box 2.
I hope you are not trying to file your FAFSA tonight and that’s why you are trying to do your taxes now.
If your state is one that has limited state grant funds for education and recommends FAFSA be filed asap then you might have to file it now with best estimate income numbers and come back to do the data retrieval tool to import tax return information once the tax return processes in a few weeks.
As far as taxes, you should have reported what was actually paid in 2015. For 2015 you could have possibly claimed more tuition expenses paid by you if the employer didn’t make all of the payments.
But you can deal with that later. I would talk to a tax professional to see if you should amend the 2015 return.
Does the employer benefit only pay for tuition or can it be used for room and board?
What other scholarships do you have? Can any be used for room and board?
If all of the scholarships and employer payments in 2016 exceeded the amount of your tuition, fees and book expenses, then you report the excess on your tax return as taxable.
Depending on your total income you might not actually owe any tax.