I have been receiving tuition reimbursement from my employer and they pay the education institution directly. Once the reimbursement reaches $5250 for the year I know that I am responsible for paying taxes on the assistance over that amount. In my last paycheck my employer included the tuition amount as income, thus I was taxed on it which brought my take home amount to nearly zero. Are they allowed to handle the tuition this way, or are they supposed to report it as income on my W2, which I would then report on my taxes and pay taxes on?