Discussion:Reimbursed Education Expenses
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Discussion Forum Index --> Advanced Tax Questions --> Reimbursed Education Expenses
Discussion Forum Index --> Tax Questions --> Reimbursed Education Expenses
| 28 January 2008 | |
| Taxpayer worked for an employer in 2007 who reimbursed education costs. Taxpayer is required to stay with employer one year beyond the reimbursement to prevent having to repay any reimbursements. He was reimbursed 100% of his costs and thus, claimed no education expenses, credits, etc.
Taxpayer has recently found a new position (early 2008) and has decided to leave employer for the new opportunity and is now on the hook to repay the former employer about $4,000 for education expenses reimbursed in 2007. I would expect that the proper handling would be to go back and amend 2007 and claim the education expenses that have now been repaid. What say ye? Anything else I should consider? | |
| 29 January 2008 | |
| Don't think you can amend a return for events that transpired after the end of the year. Recommend claiming the expense in the year that he reimbursed his employer. | |
| 29 January 2008 | |
| Tips,
my concern was that there is no 1098-T in Year 2, the year he paid the employer back. thanks for the thought. | |
| 29 January 2008 | |
| My concern would be that an employee is not allowed to deducted expenses that they are entitled to receive reimbursement for but choose not to. Did the taxpayer choose not to get reimbursed when they decided not to stay? | |
| 29 January 2008 | |
| I would hesitate to amend the 2007 or try to claim in 2008 because of issues pointed out by both 94nole and TonyM:
The expenses were incurred in 2007, paid by the employee in 2007, and reimbursed by the employer in 2007. I believe 2007 therefore would be a closed book. The $4000 being repaid to the employer in 2008 is because the employee chose not to fulfill the agreement for the earlier reimbursement. The employee can not claim a credit for reimbursements that are declined. | |
| 29 January 2008 | |
| Employee certainly hasn't declined reimbursement. He'd probably be glad to accept them, but he no longer qualifies for reimbursement because of new employment | |
| 29 January 2008 | |
| I would also argue that 2007 is proper year for deduction. Has he in effect he has paid his expenses with "borrowed funds"? Not much different here from a loan from employer that he had to pay back instead of employer forgiveness. | |
Death&Taxes (talk|edits) said: | 29 January 2008 |
| Are we talking about deduction for education on front page, or 2106 type expenses....if the latter, the first thing to find out is 'are they deductible' Some employers are real sugar daddys in reimbursing education for anything. | |
| 29 January 2008 | |
| CATAXES: Considering it a loan is an interesting thought. However, I would be concerned that it had already been considered a reimbursement for 2007, not a loan. Could the change be supported? D&T's questions about where to put it also bring up further considerations. Tuition deduction, 2106 expense, or 8863? | |
Westerntreks (talk|edits) said: | 29 January 2008 |
| Considering the TP didn't meet the requirements of the employer's education re-imbursement plan, isn't the re-imbursement really 2007 "wages paid in error"?
Quoting from the W-2 instruction Wages “… paid in error in a prior year remain taxable to him or her for that year. This is because the employee received and had use of those funds during that year. The employee is not entitled to file an amended return (Form 1040X) to recover income tax on these wages. Instead, the employee is entitled to a deduction (or a credit, in some cases) for repaid wages on his or her Form 1040 for the year of repayment.” So if the repayment is made in 2008, it is dealt with in that tax-year filing. But, if the education expenses of 2007 meet the criteria for an education deduction or credit, why wouldn't you file the 1040X to claim the entitled tax benefit, just like anyother correction to 2007? | |
