Page 1 of 1

Question On Reimbursed Educational Reimbursements on Taxes

Posted: Mon Jan 20, 2014 3:27 am
by MattE
I work full-time as an engineer and am finishing up my Master's part-time on the side. My current employer reimburses my tuition expenses. However, I am looking to leave my current job within the next several months for better opportunities elsewhere, and my tuition reimbursement from my employer has a conditional clause attached to it that states that if I leave the company voluntarily or am fired with cause, I have to pay back whatever I'd received in tuition reimbursement within the previous 12 months of my day of separation. If this were to happen after I've already filed my 2013 tax return, would I simply have to file an amended return claiming the additional qualified tuition expenses?

Re: Question On Reimbursed Educational Reimbursements on Tax

Posted: Mon Jan 20, 2014 10:06 am
by HouseStark
Since you are talking about a repayment that may occur in the future and did not occur in 2013, it wouldn't affect your 2013 tax return. Since you didn't pay those education expenses in 2013, as they were paid by your employer or reimbursed, you can't claim a tax benefit for them on the 2013 return. If you repay them in 2014 or later that will not affect your 2013 return since that repayment did not occur in 2013. Whether you can claim the repayment as an education expense in the year the repayment occurs seems uncertain. You would not be paying an education expense, rather you would be repaying an employee benefit under terms of your employment. That would seem to be an important difference.

Re: Question On Reimbursed Educational Reimbursements on Tax

Posted: Mon Jan 20, 2014 11:56 am
by guitarguy
HouseStark wrote:Since you are talking about a repayment that may occur in the future and did not occur in 2013, it wouldn't affect your 2013 tax return. Since you didn't pay those education expenses in 2013, as they were paid by your employer or reimbursed, you can't claim a tax benefit for them on the 2013 return. If you repay them in 2014 or later that will not affect your 2013 return since that repayment did not occur in 2013. Whether you can claim the repayment as an education expense in the year the repayment occurs seems uncertain. You would not be paying an education expense, rather you would be repaying an employee benefit under terms of your employment. That would seem to be an important difference.
I'm watching this thread very closely as I'm in the EXACT same situation with my employer...

If it's anything like my situation with my employer, I actually did pay those tuition expenses in previous years (2012 and 13), but never claimed the expense because I was reimbursed. Should I need to pay these monies back to my employer, therefore negating the reimbursement I received from them, I see no reason why I couldn't go back and file amended returns for those expenses that were directly paid from me to the university in those previous years. :confused

Is that correct or would I (and the OP) be SOL for all those expenses paid??

Re: Question On Reimbursed Educational Reimbursements on Tax

Posted: Mon Jan 20, 2014 11:56 am
by BolderBoy
Are we to presume that your Master's degree is not such that it would qualify you for a "new occupation" in the eyes of the IRS? An employer-reimbursed educational program is very nice as it can sidestep that question to a large extent, when if you were wanting to do it yourself, you might not be able to. With that in mind, the IRS might disallow your later claim of work-related education expense.

Re: Question On Reimbursed Educational Reimbursements on Tax

Posted: Mon Jan 20, 2014 12:17 pm
by pshonore
BolderBoy wrote:Are we to presume that your Master's degree is not such that it would qualify you for a "new occupation" in the eyes of the IRS? An employer-reimbursed educational program is very nice as it can sidestep that question to a large extent, when if you were wanting to do it yourself, you might not be able to. With that in mind, the IRS might disallow your later claim of work-related education expense.
Depends on what he's claiming; If he's claiming an Education Credit like LLC, there are few restrictions on that particular credit other than a max credit of $2K on 10K of expenses. Education expense as part of an Unreimbursed Employee Business Expense itemized deduction would have more stringent requirements (including a 2% AGI floor).

Re: Question On Reimbursed Educational Reimbursements on Tax

Posted: Mon Jan 20, 2014 12:27 pm
by guitarguy
pshonore wrote:
BolderBoy wrote:Are we to presume that your Master's degree is not such that it would qualify you for a "new occupation" in the eyes of the IRS? An employer-reimbursed educational program is very nice as it can sidestep that question to a large extent, when if you were wanting to do it yourself, you might not be able to. With that in mind, the IRS might disallow your later claim of work-related education expense.
Depends on what he's claiming; If he's claiming an Education Credit like LLC, there are few restrictions on that particular credit other than a max credit of $2K on 10K of expenses. Education expense as part of an Unreimbursed Employee Business Expense itemized deduction would have more stringent requirements (including a 2% AGI floor).
What's the distinction here?

Say you work for Megacorp and are getting a degree that's directly related to your current employment (at least in part), but some classes are also not directly related to your current job but more to what your career path may bring you in the future.

Re: Question On Reimbursed Educational Reimbursements on Tax

Posted: Mon Jan 20, 2014 3:05 pm
by HouseStark
guitarguy wrote: I'm watching this thread very closely as I'm in the EXACT same situation with my employer...

If it's anything like my situation with my employer, I actually did pay those tuition expenses in previous years (2012 and 13), but never claimed the expense because I was reimbursed. Should I need to pay these monies back to my employer, therefore negating the reimbursement I received from them, I see no reason why I couldn't go back and file amended returns for those expenses that were directly paid from me to the university in those previous years. :confused

Is that correct or would I (and the OP) be SOL for all those expenses paid??
Your situation would seem to be about the same. The fact that you paid the tuition yourself and were then reimbursed by your employer is not a meaningful difference. There would not be any distinction as far as a tax benefit between the employer paying expenses directly and the employer reimbursing employee paid education expenses. You were correct in not claiming any education tax benefit for those years. In either case, the employee could not claim any education tax benefit for those expenses.

Likewise, your situation is similar in the case of future payback. I do not believe you could amend your 2012 & 2013 returns for expenses paid back in a later tax period. If the payback occurred in the same tax year I would think differently, but this would be a subsequent tax year, so you won't be making the payback in 2012, and you weren't eligible then because you were reimbursed.

I don't assert this is the definitive answer, but that's my understanding at present.

Re: Question On Reimbursed Educational Reimbursements on Tax

Posted: Mon Jan 20, 2014 4:05 pm
by HueyLD
...........

Re: Question On Reimbursed Educational Reimbursements on Tax

Posted: Tue Jan 21, 2014 10:35 am
by MattE
That would make sense. Thanks for the responses!