Tuition Reimbursement Law for Employers


P

PrinceAli

My job is willing to pay for my graduate degree in civil engineering
but they need to know what kind of law there is for tuition
reimbursement. Like how they can show that they helped me on their
taxes and then deduct it on their end.

I've been searching and all I found are tax laws for employees.

Anyone know how this works if you're a business owner?

Thanks.
 
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A

Alan

PrinceAli said:
My job is willing to pay for my graduate degree in civil engineering
but they need to know what kind of law there is for tuition
reimbursement. Like how they can show that they helped me on their
taxes and then deduct it on their end.

I've been searching and all I found are tax laws for employees.

Anyone know how this works if you're a business owner?

Thanks.
The employer can set up an educational assistance program. It
would allow the company to pay for up to $5250 of tuition, fees,
books, equipment and supplies per year per employee. The company
can deduct the cost and the employee does not have to declare the
income. Any payment in excess of $5250 is treated as compensation
and is taxable to the employee and deductible by the employer.

Here is some information on how a plan should work:

The employer must have a separate written plan;
The plan must be for the exclusive benefit of employees;
The plan must be for the purpose of providing employees with
educational assistance;
The plan must not discriminate in favor of highly compensated
employees, or their dependents;
No more than 5% of the amount paid or incurred by the employer
for educational assistance during the year may be provided to a
class of individuals who are shareholders or owners (or their
spouses or dependents), each of whom (on any date of the year)
owns more than 5% of the stock or of the capital or profit
interest in the employer;
There must be reasonable notification of the availability of the
program provided eligible employees; and
There must be satisfaction of certain reporting requirements; and
Employees qualifying for exclusion of educational benefits from
taxable income are prohibited from taking a deduction or credit
for the amount of assistance received.
 
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R

removeps-groups

My job is willing to pay for my graduate degree in civil engineering
but they need to know what kind of law there is for tuition
reimbursement. Like how they can show that they helped me on their
taxes and then deduct it on their end.

I've been searching and all I found are tax laws for employees.

Anyone know how this works if you're a business owner?
Try publication 15B.

<Quote source="http://www.irs.gov/publications/p15b/ar02.html#d0e1101>

Assistance over $5,250. If you do not have an educational assistance
plan, or you provide an employee with assistance exceeding $5,250, you
can exclude the value of these benefits from wages if they are working
condition benefits. Property or a service provided is a working
condition benefit to the extent that if the employee paid for it, the
amount paid would have been deductible as a business or depreciation
expense. See Working Condition Benefits, later.

</Quote>

If the assistance is a working related benefit, then it is not taxable
to the employee even over $5,250 (this is the 2008 limit). But what
is an example of a working related benefit, and what isn't. Later on
they say: "Examples of working condition benefits include an
employee's use of a company car for business and job-related education
provided to an employee." So if the tuition is very closely related
to the job, then maybe there is no limit. But where does the line get
drawn?
 

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