Let's say I plan on attending graduate school part-time and that I am currently employed full-time at a company that offers full tuition reimbursement for graduate school with the catch that I must work at the company for X years after reimbursement.
Assume that affordability is not an issue and that we are solely looking optimize this expense based on taxes, etc.
If I pay for graduate school out of pocket, I can take advantage of various tax deductions such as Lifetime Learning Credit and/or Tuition and Fees Deduction. In this scenario I pay an amount less than full tuition from existing income.
If I take advantage of my employer's tuition reimbursement program and stay X years, my tax burden is only on what is above the IRS's limit on tax-free tuition reimbursement ($5,250 as of 2017). In this scenario I pay only taxes on some of the new income used towards tuition. It doesn't touch existing income.
If I take advantage of my employer's tuition reimbursement program and leave the company in the future before X years, I have to pay back my reimbursement to the employer. My understanding is that I do not get to claim this on my taxes in any way. This means that I pay full tuition from existing income.
Is it correct that I have no claim to tuition tax benefits if I have to repay tuition assistance to my employer? If so, it leads me to believe that my employer's tuition assistance is only useful if I know for a fact that I will stay at the company for X years.