Education pd by Co, now wants pay back

[JBtaxman]

I would appreciate any help. Have client who was paid to get Masters Degree (paid tuition by re-embursment) in 04-05. He resigned in 06 so Company deducted from pay part of Tuition paid and forced a promisary note for balance. Client paid all back ($7K out of Vacation pay they held, $25K paid off note) in 06. Can this be amended as Sched A Misc Job expense (all in 1yr) or do I need to amend 04 & 05 to get College Lifetime Credits. Any options or opinions please, thanks, JB in VA. :scratch_head:

[Pacun]

I would appreciate any help. Have client who was paid to get Masters Degree (paid tuition by re-embursment) in 04-05. He resigned in 06 so Company deducted from pay part of Tuition paid and forced a promisary note for balance. Client paid all back ($7K out of Vacation pay they held, $25K paid off note) in 06. Can this be amended as Sched A Misc Job expense (all in 1yr) or do I need to amend 04 & 05 to get College Lifetime Credits. Any options or opinions please, thanks, JB in VA.

I would assume that the tuition reimbursement is a loan that you are responsible for if you leave the company. Since in fact, your client left, he becomes personally liable for the loan. I would amend and get the education credits. Make sure you keep good records. Is the company called SRA? (not that matters).

[jainen]

>>Can this be amended as Sched A Misc Job expense (all in 1yr) or do I need to amend 04 & 05 to get College Lifetime Credits<<

Although the degree may have had some relevance to work, it was not job-related. It was part of the compensation package, mostly a taxable fringe benefit with less than a third eligible for pre-tax reimbursement. The worker was required to repay the compensation because he did not fulfill the requirements to earn it. You can't take a deduction for repaying a non-taxable fringe benefit, and you can't take a job expense deduction for personal costs even if you pay them to the employer.

Lifetime Learning Credit is only available for expenses paid in or before the school year. His expenses were reimbursed, and there is no provision for late payments or repayments. This debt and payment arose years after and independent of the coursework. It is simply a personal note with no tax consequences to the worker.

[JBtaxman]

Thanks for the info, it was that non-taxable fringe benefit turned to Note that had me wondering. I'll go back to Lifetime Ed for 04 &05. Thanks again, JB

[JBtaxman]

I would assume that the tuition reimbursement is a loan that you are responsible for if you leave the company. Since in fact, your client left, he becomes personally liable for the loan. I would amend and get the education credits. Make sure you keep good records. Is the company called SRA? (not that matters).

NO, SONY, and not very nice working for them. Thanks for the help, JB