{"id":697,"date":"2013-06-27T15:05:30","date_gmt":"2015-11-25T18:54:45","guid":{"rendered":"\/will-i-be-taxed-employer-tuition-assistance"},"modified":"2025-02-10T12:37:21","modified_gmt":"2025-02-10T20:37:21","slug":"will-i-be-taxed-employer-tuition-assistance","status":"publish","type":"post","link":"https:\/\/www.irs.com\/en\/will-i-be-taxed-employer-tuition-assistance\/","title":{"rendered":"Will I be taxed for employer tuition assistance?"},"content":{"rendered":"<h3>Employer tuition assistance (aka educational assistance) could be taxable. Check whether your employer&#8217;s program counts as an exception.<\/h3>\n<p>&nbsp;<\/p>\n<p>As the cost of education rises \u2013 and with it student-loan debt \u2013 prospective students are looking to spread out the cost of their education among as many individuals and entities as possible.<\/p>\n<p>Tuition support from employers can be a great way to save some money and disperse the total burden. But there are limitations on the amount and type of support your employer can provide.<\/p>\n<p><a href=\"https:\/\/www.irs.com\/en\/you-can-deduct-you-job-seeking-expenses\/\" target=\"_blank\" rel=\"noopener\">READ: You can deduct your job-seeking expenses<\/a><\/p>\n<p><strong>Why would I want educational assistance from my employer instead of the bank?<\/strong><\/p>\n<p>If your employer\u2019s educational assistance program qualifies for a <a href=\"https:\/\/www.irs.com\/articles\/strategies-for-tax-exemptions\" target=\"_blank\" rel=\"noopener\">tax exemption<\/a>, then the money you apply to your education will be tax-free.<\/p>\n<p>That raises the real value of the educational assistance when compared to the other benefits your employer can provide, such as income or a gym membership.<\/p>\n<p>Let\u2019s say you receive $1,000 in educational assistance. All of that money can be applied directly to your education. If you received $1,000 from your income, then that income would be taxed, and the education you could buy would be reduced.<\/p>\n<p>That is why educational assistance programs are so powerful and attractive, but there are some restrictions you should know about.<\/p>\n<p><strong>How do I know if my employer\u2019s educational assistance will qualify for tax-exempt status?<\/strong><\/p>\n<p>Only qualified tuition assistance will be untaxed.<\/p>\n<p><strong>To qualify, the assistance must adhere to the following rules:<\/strong><\/p>\n<ul>\n<li>The total exemption allowable is $5,250. All educational assistance above this figure will be classified as a fringe benefit and subject to regular taxation.<\/li>\n<li>Compensation is limited to reimbursement for tuition, fees and school supplies. Other goods, such as meals, lodging and transportation, cannot be covered by a qualified program. Even school supplies cannot be reimbursed if they are not depleted by the course. Textbooks are the exception to this rule, but a computer would not be covered.<\/li>\n<li>Unnecessary courses involving sports, games or hobbies do not qualify.<\/li>\n<li>Graduate-level education cannot be covered unless you also take part in a work-study program.<\/li>\n<\/ul>\n<p>The total exemption cap can be stretched further. Classes that can be directly applied to your job can be qualified as working condition benefits, which are not subject to the $5,250 maximum.<\/p>\n<p><a href=\"https:\/\/www.irs.com\/articles\/do-you-have-any-tax-tips-newlyweds\" target=\"_blank\" rel=\"noopener\">READ: Tax tips for newlyweds<\/a><\/p>\n<p>Generally, degree programs as a whole do not qualify as working condition benefit, but individual courses within a program might.<\/p>\n<p>Your employer should present you with a document outlining your tuition assistance plan for you to sign before your classes begin. The document is also necessary for qualification.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Employer tuition assistance (aka educational assistance) could be taxable. Check whether your employer&#8217;s program counts as an exception. &nbsp; As the cost of education rises \u2013 and with it student-loan debt \u2013 prospective students are looking to spread out the cost of their education among as many individuals and entities as possible. Tuition support from [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":7001,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[26,28,27],"tags":[],"class_list":["post-697","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-education","category-taxes-and-education","category-taxes-college-students"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/posts\/697","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/comments?post=697"}],"version-history":[{"count":3,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/posts\/697\/revisions"}],"predecessor-version":[{"id":9441,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/posts\/697\/revisions\/9441"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/media\/7001"}],"wp:attachment":[{"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/media?parent=697"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/categories?post=697"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/tags?post=697"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}