I work full time and attend graduate school part time. My education is job related and does not qualify me for a new profession. My employer reimburses me for an amount that exceeds $5,250 per year. When I am reimbursed for amounts exceeding $5,250, it is taxed as ordinary income. My question arises when I am trying to calculate my eligible education expenses (basis) used to calculate the lifetime learning tax credit. I received form 1098T from my school stating how much tuition was paid by me for the year. Since my employer reimbursed me for part of this amount, I know I cannot use the full tuition amount for my basis for the credit. How much should I reduce this by? Just the tax free $5,250? Or by the total amount reimbursed pre-tax, or post tax?