Author Topic: Ohio 529 Plan and Employer Tuition Reimbursement  (Read 418 times)

Paradoxically

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Ohio 529 Plan and Employer Tuition Reimbursement
« on: December 06, 2017, 09:04:20 AM »
Hey all,

Question for anyone with expertise in the area of 529 plans...

I am taking online graduate classes, for which my employer fully reimburses after the class is complete. I recently moved to Ohio which offers a pre-tax deduction on up to $2000 (per beneficiary, per year, unlimited roll-forward) on money placed into a 529 plan.

My ideal situation would be:
Contribute $2000 to 529 in 2017, claim $2000 tax deduction on 2017 OH taxes (No federal pre-tax deduction).
Pay up front for classes in January, using $2000 from 529 and rest from checking (~$4000 total)
Receive Reimbursement from employer in June (~$4000)
Pay up front for classes in August (~$4000)
Receive Reimbursement from employer in December (~$4000)
Contribute $2000 to 529 in 2018
Repeat in 2019

Or alternatively, contribute $8k to 529 in 2017, use those funds for 2018 tuition payments, claim $2k OH deduction for 2017-2020.

Totals:
$2000 deduction from OH Income tax
~$8000 tuition reimbursement from employer ($5250 tax free, $2750 taxable income Fed+OH)

Questions:
1: Can I use 529 plan funds to pay for education I am being reimbursed for?
2: Can I use tuition deductions for the taxable portion of employer reimbursements ($2750)? [May not matter, I think tuition deductions phase out based on AGI? I am ~85k AGI MFJ]

EricEng

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Re: Ohio 529 Plan and Employer Tuition Reimbursement
« Reply #1 on: December 19, 2017, 04:16:04 PM »
No.  I tried this and got burned in last year's taxes for my master's class.  You can't get tax free reimbursement from work while also using the graduate school expenses to claim a deduction.  Maybe there is a way, but my taxes got all messed up by trying to do both.