Reimbursement/Tax question

[linearfish]

My wife recieves 100% tuition reimbursement tax-free (up to $5250) and after that she still gets reimbursed, but it counts as income. Last year she paid for her fall semester 2005 in August and spring semester 2006 in December so in total she paid $5,360 in tuition and fees in 2005. Her employer processes reimbursement after she completes the class so she didn't recieve her first reimbursement check until January 2006 for her Fall 2005 classes.

Thanks for bearing with me, here's my question: Since most of what she paid in 2005 will eventually be reimbursed, does that prohibit her from claiming a tuition and fees deduction on our 2005 taxes?

My first inclination is that she could not, or she could only claim the $110 difference that would not be reimbursed tax-free. However, that seems unfair since her employer's delay in getting her the reimbursement prevents her from getting $5250 in 2005 tax-free and $5250 in 2006 tax-free.

This may be something we need to see a tax specialist about, I'm not sure. Otherwise our taxes are pretty straight-forward. Any help on this is greatly appreciated.

[LdiJ]

Originally Posted by linearfish

My wife recieves 100% tuition reimbursement tax-free (up to $5250) and after that she still gets reimbursed, but it counts as income. Last year she paid for her fall semester 2005 in August and spring semester 2006 in December so in total she paid $5,360 in tuition and fees in 2005. Her employer processes reimbursement after she completes the class so she didn't recieve her first reimbursement check until January 2006 for her Fall 2005 classes.

Thanks for bearing with me, here's my question: Since most of what she paid in 2005 will eventually be reimbursed, does that prohibit her from claiming a tuition and fees deduction on our 2005 taxes?

My first inclination is that she could not, or she could only claim the $110 difference that would not be reimbursed tax-free. However, that seems unfair since her employer's delay in getting her the reimbursement prevents her from getting $5250 in 2005 tax-free and $5250 in 2006 tax-free.

This may be something we need to see a tax specialist about, I'm not sure. Otherwise our taxes are pretty straight-forward. Any help on this is greatly appreciated.

If she takes a tuition and fees deduction for 2005....then she is going to have to count the entire reimbursement as income in 2006.