Is Box 1 on 1098-T still considered qualified education expenses when my company covered most of my tuition?
Title: Is Box 1 on 1098-T still considered qualified education expenses when my company covered most of my tuition? 1 I'm confused about how to handle my 1098-T for my 2024 taxes. Last year (2023), my employer paid for most of my graduate courses that I'm taking this spring semester (2025). The total tuition and fees came to $6,235.50, but my company directly paid $5,953.50 to the university through their education assistance program. I just received my 1098-T and it shows only $282 in Box 1, which is the small portion I had to pay out of pocket after my employer's contribution. I'm entering this 1098-T into my tax software and I'm not sure how to proceed. Am I supposed to mark the employer-paid portion as not being qualified education expenses? Or is the amount in Box 1 already reflecting only what I personally paid? The software is asking me if I received any tax-free educational assistance, and I'm confused about how this affects the qualified education expense calculation.
19 comments
Join the conversation
Kendrick Webb
7 That Box 1 amount on your 1098-T is only showing what you paid out of pocket, not the full tuition amount. When your employer pays tuition directly to the school, the school generally doesn't include that amount in Box 1 of your 1098-T. You need to mark that you received tax-free educational assistance when prompted by the software. Your employer's payment is considered tax-free education assistance (up to $5,250 annually under Section 127 plans). If they paid more than $5,250, the excess should have been included as taxable wages on your W-2. Since the amount in Box 1 ($282) is what you paid personally, you can only claim education credits (like the Lifetime Learning Credit) based on that amount, not on the full tuition. The expenses paid by your employer don't count as qualified education expenses for education credits because you didn't pay them.
0 coins
Kendrick Webb
•13 Thanks for explaining! Do I need to report the employer payment somewhere specific on my tax return, or will the software handle that when I indicate I received educational assistance? Also, what if my employer didn't include any of this on my W-2? Should I be concerned?
0 coins
Kendrick Webb
•7 You don't need to specifically report the employer payment on your return - just indicate that you received educational assistance when prompted. The software will adjust your qualified expenses accordingly. If your employer paid more than $5,250 for your education in 2023 and didn't include the excess on your W-2 as taxable wages, you should contact your HR department. It's possible they made an error, or perhaps the benefit is part of a working condition fringe benefit that's job-related and therefore fully excludable from income. I'd recommend double-checking with your payroll department to ensure everything was reported correctly.
0 coins
Kendrick Webb
5 After struggling with almost this exact situation last year, I found taxr.ai (https://taxr.ai) incredibly helpful for deciphering education tax forms. I uploaded my 1098-T and W-2, and it instantly identified that my employer had covered tuition but hadn't properly reported the amount over $5,250 as taxable income on my W-2. The tool explained exactly how employer-paid education expenses affect Box 1 on the 1098-T and how to properly report everything. It also helped me determine which education credits I was still eligible for based on the portion I paid myself. Really saved me from potentially making a costly mistake.
0 coins
Kendrick Webb
•16 How does taxr.ai handle situations where the employer payment spans multiple tax years? My company paid for my Spring 2025 semester in December 2024, but I'm taking the classes now in 2025. Does the tool recognize this timing issue?
0 coins
Kendrick Webb
•9 I'm skeptical about these tax tools. How do you know it's giving accurate advice? My college coursework is for a completely different field than my current job, so I'm not sure if the $5,250 limit even applies in my case or if it's all taxable.
0 coins
Kendrick Webb
•5 The tool handles cross-year payments really well actually. It analyzes the payment date versus the academic period and gives guidance on which tax year to claim the expenses. This exact timing issue is something it flagged for me too. For education in a different field, taxr.ai specifically checks this distinction. It asks whether your coursework is related to your current profession or is for a new career. The $5,250 limit for employer education assistance applies regardless of whether the education is related to your current job - that's a benefit of Section 127 plans. But the tool will clarify if your employer's program qualifies and if there are any exceptions in your situation.
0 coins
Kendrick Webb
16 Just wanted to update after trying taxr.ai. It was honestly way more helpful than I expected! I uploaded my 1098-T, and it immediately explained that Box 1 only shows what I paid out-of-pocket after employer assistance. The tool also identified that my employer actually paid for courses crossing two tax years and explained exactly how to report this correctly. It saved me from potentially claiming the wrong amount of qualified expenses and showed me that I was still eligible for a small education credit based on the $282 I paid myself. The explanations were really clear about the employer education assistance rules too. Much better than the confusing explanations in my tax software!
0 coins
Kendrick Webb
12 If you're struggling to get clear answers about your 1098-T situation, I'd recommend using Claimyr (https://claimyr.com) to get through to an IRS agent directly. I was in the same situation last year, spent hours researching online, and got conflicting information. I tried calling the IRS myself but couldn't get through after multiple attempts. Then I used Claimyr (you can see how it works here: https://youtu.be/_kiP6q8DX5c), and they got me connected to an IRS representative in about 20 minutes. The agent walked me through exactly how to handle employer-paid education expenses and confirmed that Box 1 on the 1098-T only reflects what I paid personally, not what my employer paid.
0 coins
Kendrick Webb
•3 How does Claimyr actually work? Do they just call the IRS for you or what? I've been trying to get someone on the phone for days about a similar education credit question.
0 coins
Kendrick Webb
•22 Yeah right. I seriously doubt anyone can get through to the IRS that quickly. I've been trying for weeks about an education credit issue. Even if it did work, they probably charge a fortune for something you could eventually do yourself for free.
0 coins
Kendrick Webb
•12 They don't call for you - they basically hold your place in line. You register your phone number with them, and their system navigates the IRS phone tree and waits on hold. When they reach a real person, they connect the call to your phone. It's like having someone wait in a physical line for you. I was really skeptical too at first. I had tried calling four separate times and couldn't get through. With Claimyr, I got connected to an IRS agent in about 20 minutes, which saved me hours of frustration. They actually specialize in connecting you with hard-to-reach government agencies, not just the IRS. The expert I spoke with clarified everything about my 1098-T and employer education benefits.
0 coins
Kendrick Webb
22 I need to eat my words and apologize. I tried Claimyr this morning after weeks of failing to reach the IRS about my education credit question, and I actually got through to an agent in about 15 minutes. The agent confirmed that the Box 1 amount on my 1098-T only represents what I paid out of pocket, not what my employer paid through their tuition assistance program. She also explained that I needed to reduce my qualified education expenses by the amount of tax-free educational assistance I received, which is exactly what I was confused about. I was able to get everything straightened out for my return. Definitely worth it after wasting so many hours trying to call them myself.
0 coins
Kendrick Webb
18 Just to add another perspective - make sure you check if your employer reported the education benefit correctly on your W-2. I had a similar situation and my company had incorrectly included the entire tuition amount as taxable income in Box 1 of my W-2, even though it should have been tax-free up to $5,250. I had to ask them to issue a corrected W-2 which reduced my taxable income. Might be worth double-checking your W-2 to make sure they didn't mistakenly include the tuition payment as taxable income!
0 coins
Kendrick Webb
•1 I just checked my W-2 and I don't see anything unusual in Box 1, but how can I tell if they included the tuition payment? Is there a specific box or code I should look for? My employer paid about $5,953 for my courses last year.
0 coins
Kendrick Webb
•18 The W-2 won't specifically identify the tuition payment. You'd need to look at your last paystub of the year which should break down your annual earnings, and compare the year-to-date (YTD) earnings to what's in Box 1 of your W-2. Since your employer paid $5,953, they should have included only the amount over $5,250 as taxable income (so about $703 should be taxable). If Box 1 on your W-2 seems about $703 higher than you'd expect based on your salary, they probably reported it correctly. If it seems $5,953 higher, they may have incorrectly included the full amount as taxable. You could also ask your HR or payroll department for a breakdown of what was included in your W-2 Box 1 amount.
0 coins
Kendrick Webb
11 Does anyone know if classes that were paid for in 2023 but taken in 2024 count for the 2023 or 2024 tax year? My 1098-T is showing Box 1 amount for what I paid out of pocket, but I'm confused about which year I claim it since the payment and the actual classes are in different tax years.
0 coins
Kendrick Webb
•4 You generally claim education expenses in the year you pay them, not when you take the classes. So if you or your employer paid for classes in December 2023 that you're taking in Spring 2024, those expenses would count for your 2023 taxes (the year you file in 2024). The exception is if you prepaid for classes starting more than 3 months after the payment or for an academic period that begins in the first 3 months of the following year. It gets complicated fast, which is why the 1098-T can be so confusing!
0 coins
Myles Regis
Just want to clarify something important about the timing issue mentioned - if your employer paid for Spring 2025 classes in December 2024, those expenses would typically count for your 2024 tax year (not 2025) since that's when the payment was made. However, there's an exception for academic periods that begin in the first three months of the following year. Since Spring 2025 likely starts in January-March 2025, you might have the option to claim those expenses on either your 2024 or 2025 return, but not both. The IRS allows this flexibility for payments made in the last few months of the year for the next year's spring semester. Also, regarding the W-2 reporting - if your employer paid $5,953 and it was through a Section 127 educational assistance program, only the amount over $5,250 (so $703) should appear as taxable income on your W-2. The first $5,250 is tax-free regardless of whether the education is job-related or not.
0 coins