IRS Tax issues
Tuition Exchange members should seek guidance from their own tax and legal professional advisers. For basic information consult www.IRS.gov Publication 970, Tax Benefits for Education. IMPORT schools will provide enrolled students a 1098-T for whom a reportable transaction is made. Tax filers file this form for each individual to whom they made reimbursements or refunds of qualified tuition and related expenses.
Excerpts from Publication 970: "Qualified tuition reduction means a tax-free reduction in tuition provided by an eligible educational institution." ... "for education below the graduate level" ..." provided to the following individuals: "current employee, former employee who retired or left on disability, widow or widower of an individual who died while an employee, a widow or widower of a former employee who retired or left on disability, a dependent child or spouse of any person listed above."
It is important to note that graduate education is excluded unless it is provided "to a graduate student who performs teaching or research activities" and that the tuition reduction "must not discriminate in favor of owners, officers, or highly compensated employees".