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Old 04-13-2016, 03:23 AM   #1
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In-state tuition/employer assistant

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Hi, everyone! I hope tax season is treating you all right.

I have a question about the Tuition Statement (1098-T). It's a little long, but I think that's a requirement for tax questions.

I am a university student, and I took a research assistanceship position last year. One of the benefits was that my employer (the university) granted my spouse in-state tuition.

Instead of reducing her tuition, it appears that my employer made a payment to her account.

So far, so good. On my spouse's form 1098-T, the total amount deposited from my employer appears in block 5 (Scholarships or grants).

My tax preparation website notes that "Any money (up to $5,250 each year) you receive from your employer for tuition and fees is tax-free. If you received more than $5,250, the amount over $5,250 is taxable."

So there are two points I would like to understand better:

First: I am confused by the phrasing of the quote in the previous paragraph. In this case, I didn't receive any money, the money went directly to the university. Does the $5,250 limit still apply in this case?

Second: As I understand it, the amount in block 1 (Payments received for qualified tuition and related expenses) or block 2 (Amounts billed for qualified tuition and related expenses) is the amount that went to the university for qualified tuition and fees. This can be deducted. The maximum for this deduction is $4,000, according to this IRS site.

It seems the intent would be the total amount of tuition and fees minus the scholarships/grants would yield the allowable deduction, up to a maximum of $4,000. Is my understanding correct?

Thank you for taking the time to read this. I appreciate any thoughts or comments!
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