Greetings all and thank you for the help. DW is going back to school for an advanced degree with most of the tuition paid by her employer. I want to make sure I understand the tax implications of this. Please let me know if you have any advice.
Federal Income Tax
1. Household income (>200k) is higher than income limits for all deductions and credits. No help here.
2. Employer reimbursement of tuition is considered taxable income for amounts over $5,250. Some help here but will still result in a large tax bill.
State of PA Income Tax
1. Tuition is not deductible.
2. Employer Reimbursement of tuition is considered taxable income.
3. Contributions to a PA529 plan are tax deductible. Withdrawals can be used to pay tuition.
3a. Does anyone know if there is a minimum holing period? For example, contribute funds on 12/1/22, withdraw funds on 12/10/22, pay tuition 12/20/22, claim contributions as a tax deduction in 2022.
3b. Does anyone know if the order of contributions and tuition payments matter as long as it is in the same calendar year? For example, can I pay tuition on 10/15/22, contribute funds on 11/15/22, withdrawal funds on 12/15/22, and claim contributions as a tax deduction in 2022 with the 10/15/22 tuition payment as the qualifying expense?