Thanks for the advise guys. Based on your answers, it sounds
like it's worth my while to have a local accountant look at
the details and make a determination.

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BW wrote:

- quote -

Simply put, if the "reimbursement" is income to you, you
have the deduction/credit as a (partial) offset. I say
"partial" only in view of the gross up for taxes.

ChEAr$,
Harlan Lunsford, EA n LA
Mon 21 Feb 2005

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BW wrote:

- quote -

You work for a pretty good employer. Tax law allows up to
$5250 of tuition reimbursement from an employer as a
tax-free fringe benefit. Any amount in excess of $5250 is a
taxable fringe benefit added to wages. The fact that your
employer decides to provide tax assistance on the excess
reimbursement is not relevant to the question of whether you
have qualified higher education expenses for the lifetime
learning credit (LLC) as long as that tax assistance is
taxable income. Your employer is not reimbursing you for
your out-of-pocket expenses in excess of $5250. Any amount
of tuition and fees you incurred in excess of $5250 would
count as qualified higher education expenses for the LLC.

--
Alan
http://taxtopics.net

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Hi, I was hoping someone might have advice on this problem:
I am doing a masters program that is being 100% reimbursed
by my employer. Although I believe it passed the test to
make it non-taxable, my employer reports everything above
$5250 as income. I assume this means it is a
"non-accountable" plan. I believe I would normally be able
to claim a deduction or lifetime learning credit since it is
taxable income, but here is the catch: My employer "grosses
up" my federal and state taxes to cover the tax that they
think I should owe (they use the 25% tax bracket).

Ethically, I probably wouldn't claim the deduction since
they are technically paying both the tuition and the tax.
However, if for instance I was actually in a higher income
bracket and their "grossing-up" didn't fully cover my
additional tax liability, would I be able to claim a credit
for this? Could I do it in such a way to just cover my
additional liability and not the full amount?

Thanks for the help!

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