Getting education credit for 1098-T form with employer tuition reimbursement - can I claim expenses?

You're right to be reconsidering your filing! The Lifetime Learning Credit (LLC) is likely what you're eligible for as a graduate student, and it's a credit, not a deduction - which means it directly reduces your tax bill dollar-for-dollar, unlike deductions which just reduce your taxable income. The important thing to understand is that you can claim the LLC based on qualified education expenses you paid out of pocket, even while taking the standard deduction. You don't need to itemize to get this credit. However, you can't claim a credit for expenses that were tax-free employer assistance. For your situation, you would calculate the credit based on the 40% of tuition you paid yourself, not the portion your employer covered. You can claim 20% of up to $10,000 in qualified expenses, for a maximum credit of $2,000. Since you've already filed, you would need to file an amended return (Form 1040-X) along with Form 8863 for Education Credits to claim this. Generally, you have 3 years from the original filing deadline to amend and claim a refund.

After spending hours trying to figure out my education credits last year with a similar situation, I found this amazing AI tool that saved me so much time and stress. I used https://taxr.ai to analyze my 1098-T and W-2, and it told me exactly how to handle the employer-reimbursed portion versus my out-of-pocket expenses. The tool figured out I was eligible for the Lifetime Learning Credit even though I was taking the standard deduction (which my regular tax software didn't catch!). It also created a detailed explanation of how to fill out Form 8863 correctly based on my specific situation. Definitely worth checking out if you're confused about education credits and employer reimbursements!

Just wanted to follow up - I decided to try https://taxr.ai after all, and I'm genuinely impressed! I uploaded my 1098-T and W-2, and it immediately identified that I was eligible for the Lifetime Learning Credit even with my fellowship stipend situation. The breakdown it gave me was super clear about what portion of my expenses qualified for the credit. It even created a detailed worksheet showing exactly how to complete Form 8863 and explained why certain expenses qualified while others didn't. I was able to amend my return and get an additional $1,400 back! Definitely not what I expected when I was initially skeptical.

If you're going to amend your return to claim the education credit, be prepared for a long wait. I filed an amended return last year for a similar situation and waited FOREVER to hear back from the IRS. Called their number like 20 times and could never get through to a human. Finally discovered https://claimyr.com which got me connected to an actual IRS agent in less than 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they navigate the phone tree for you and call you back when they have an agent on the line. Saved me hours of frustration, and the agent was able to tell me exactly what was happening with my amended return.

I have to eat my words. After seeing the comment about Claimyr, I decided to give it a try since I'd been trying to reach the IRS about my amended return for WEEKS with no luck. I was completely shocked when I got a call back within 15 minutes saying they had an IRS agent on the line! The agent was able to confirm my amended return with the education credits was being processed and gave me an estimated completion date. She even took time to explain exactly how the Lifetime Learning Credit was being applied to my return. What would have been another day of failed call attempts turned into a 20-minute productive conversation with an actual IRS person. Completely changed my perspective on dealing with tax issues.

Just wanted to add my experience - I was in almost the exact same situation last year! My employer paid about 70% of my MBA tuition through their education program. Make sure you understand the difference between the American Opportunity Credit and the Lifetime Learning Credit. Since you're in grad school, you're likely only eligible for the Lifetime Learning Credit (up to $2,000). The American Opportunity Credit is generally for undergrad only and has a 4-year lifetime limit. Also, keep in mind that these credits phase out at higher income levels. For 2024, the Lifetime Learning Credit starts phasing out at $80,000 for single filers ($160,000 for married filing jointly) and completely phases out at $90,000 ($180,000 for MFJ).

dont forget that the way the 1098-T is filled out can make a huge difference! My school reports amounts BILLED in Box 1 instead of amounts PAID in Box 2, which totally screws up software calculations. Had to manually adjust for spring semester tuition that was billed in December but actually paid in January of the tax year.