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Employer-Offered Educational Assistance Programs Can Help Pay for College

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Posted by Admin Posted on Aug 16 2024

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An educational assistance program is an employer’s written plan to provide employees with undergraduate or graduate-level educational assistance. These programs allow employers to pay student loan debt and other education expenses tax-free.

Eligible expenses

Educational assistance programs can help pay for:

  • Books
  • Equipment
  • Supplies
  • Tuition and other fees
  • Qualified education loans

Loan payments

These programs can be used to pay principal and interest on an employee's qualified education loans.

The option is available only for payments made after March 27, 2020. Under current law, this option will be available until Dec. 31, 2025.

Payments made directly to the lender and those made to the employee qualify under these programs. By law, tax-free benefits under an educational assistance program are limited to $5,250 per employee per year. Normally, assistance provided above that level is taxable as wages.

For other requirements, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Chapter 10 in Publication 970, Tax Benefits for Education, provides details on what qualifies as a student loan.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, International Taxation, IRS Representation, U.S. Tax Implications of Real Estate Transactions or Financial Statements, please give us a call at +1-305-274-5811

Source: IRS      

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