Educational Expense Timing: Tuition Paid in 2023, Employer Assistance Coming in 2024

The key thing to understand here is that tax benefits for education are generally claimed in the year you pay the expenses, not when reimbursements happen. For your 1098-T reporting, you'd include the full amount you paid in 2023, because that's when the payment occurred. When your husband receives the employer reimbursement in 2024, you'll need to account for that differently. If the reimbursement is tax-free (which it should be if under the $5,250 education assistance limit), you won't report it as income, but you may need to "recapture" some of the education credit you claimed in 2023. This happens because you can't claim education credits for expenses that were ultimately paid by tax-free education assistance. When you file your 2024 taxes, you'll essentially be adjusting for the education credit you took in 2023 that was later reimbursed with tax-free funds.

I went through something similar last year with my MBA program and found this amazing tool called taxr.ai (https://taxr.ai) that really helped me sort through all these education credit timing issues. It analyzed my situation and showed me exactly how to handle the company reimbursements that came in a different tax year. My situation was pretty much identical - paid tuition in one year, got company reimbursement the next year. The tool laid out exactly what I needed to report on each year's taxes and how to avoid claiming credits for expenses that would eventually be reimbursed. It saved me from making a mistake that might have triggered an audit.

Just wanted to follow up - I decided to give taxr.ai a try with my own education expense situation and I'm honestly impressed. I was dealing with a mix of scholarships, grants, and my employer's tuition program (which is also paid on a delayed schedule), and the system really clarified which expenses qualified for tax credits. It even flagged that my school had put my spring semester prepayment in the wrong tax year on my 1098-T, which could have really messed up my tax calculations. The document analysis feature is pretty impressive - it caught details in my employer reimbursement policy that I hadn't considered that actually saved me from making reporting errors.

For anyone having trouble getting through to the IRS about education credit questions (which I definitely was), I found Claimyr (https://claimyr.com) super helpful. I had been trying for weeks to get clarification on how to handle my employer education reimbursements and kept hitting the "call volume too high" message. Claimyr got me through to an actual IRS representative in about 20 minutes when I'd been trying unsuccessfully for days. The rep walked me through exactly how to handle education expenses paid in one year but reimbursed in another. They even have a video showing how it works: https://youtu.be/_kiP6q8DX5c

I have to admit I was wrong about Claimyr. After posting my skeptical comment, I was desperate enough to try it because I needed clarification on my education credit situation before filing. It actually worked perfectly - got me through to an IRS agent in about 35 minutes when I'd been trying for weeks. The agent confirmed exactly what others here said - report the full tuition payment in the year paid (2023), then handle any employer reimbursement received in 2024 on that year's return. She explained the "recapture" process isn't actually filing an amended return, but rather a specific reporting method on the 2024 return. I feel kind of silly for being so doubtful, but I'm sharing this because it really did solve my IRS access problem when nothing else was working.

Just to add another perspective - I'm a grad student who had the exact same situation last year. My employer reimburses tuition but always a semester behind, so there's always this tax year mismatch. What ended up happening was I claimed the full Lifetime Learning Credit for 2023 (for what I paid out of pocket), then in 2024 when I got the reimbursement, I had to include a "recapture" amount on my 2024 tax return. It wasn't super complicated, but definitely keep good records of which semester expenses were reimbursed so you can match them up properly.

Has anyone noticed that the 1098-T forms are NEVER accurate? My school consistently puts payments in Box 1 for the wrong year (showing January payments that I actually made in December of the previous year). It's like they just report when they process the payment rather than when it was actually made.

I'm dealing with a similar situation right now! My wife is in a PhD program and we've been navigating the employer reimbursement timing issue for three years now. One thing I learned that might help - make sure you understand exactly what your husband's employer considers "qualified education expenses" for their reimbursement program. Some employers have stricter definitions than what the IRS allows for education credits. For example, my wife's employer only reimburses tuition and required fees, but not books or lab fees that we can still claim for the Lifetime Learning Credit. This means we need to track which specific expenses will be reimbursed versus which ones we can claim the full credit for. Also, I'd recommend reaching out to your husband's HR department to get a written timeline for when the reimbursement will be processed. Having that documentation helps with tax planning and ensures you're prepared for the recapture calculation in 2024. We've found that being proactive about getting reimbursement status updates makes the whole process much smoother.