Tuition reimbursed by employer - NOT in same year

[Catherine]

Client took a grad-level course for work; paid for it herself, in 2013.

Employer supposedly will reimburse for this course - but not until later in 2014.

How does this affect how I can treat this course for tax purposes? I cannot find any clear guidance in The Tax Book or my other first reference point sources; they all deal with reimbursement the same year as the course, which is not the case here.

TIA,

Catherine

[kcjenkins]

Well, it can be used now, since she paid it. If so, then the reimbursement become 'income' in 2014. If not used in 2013 the reimbursement won't be taxable in 2014. So it gives you some planning options based on timing issues.

[Lion EA]

And, a 2013 deduction will be what? 2106? LL? How much is that worth to her 2013 bottom line? If she's really sure she'll be reimbursed, as KC said, she can save reporting income in 2014 if she forgoes the 2013 deduction. But, if she has any doubts on the reimbursement, she may choose to take the 2013 deduction. Lay out her options with the corresponding consequences and let her choose.

[Catherine]

Thanks, KC and Lion.

My first concern with this issue was how certain the reimbursement is -- most places, if you take a course for work, they reimburse right away. Any delay usually means they've come up with some obscure rule to weasel out of paying. But I will get hard figures on just how much help claiming this will (or will not) be, whether using LL or 2106.

Catherine

[BulldogTom]

We had a policy that we would pay for the course if it was related to the employee job and increased their skill. But we would not reimburse unless the employee recieved a grade of B or better. Had to wait until the course was taken and the grades posted to get your reimbursement. It ensured that the employee was serious about the courses they were taking.

What happens if the employer is paying tax free dollars to the employee? Make sure to consider that angle.

Tom

Hollister, CA

[Lee B]

Exactly, my daughter who is a Registered Nurse and employed by a hospital receives a Tax Free Reimbursement

for graduate level classes she is currently taking. The tax free reimbursement is for less than 100 % of the tuition.