Employer Educational Assistance Programs

Many employers provide an Educational Assistance Program as a fringe benefit to their employees, typically full-time or near full-time employees.  Under these wonderful programs, the employer either reimburses the student/employee or pays the educational institution directly for tuition and fees.  The economic benefit provided to the employee through the Program is an untaxed benefit of up to $5,250 per year.

Both undergraduate and graduate instruction (full or part-time) qualify for tax-free treatment. “Double-dipping” is prohibited: you cannot use the value of your Employer Educational Assistance Program payment as qualified tuition payments in the computation of Education Credits (see page 98).

NOTE:  If this benefit is available to you (even if you have to increase your work hours to get it), take full advantage of it.  This is better than a tax credit or deduction that you otherwise are paying out of your wealth: it’s a tax-free gift from your employer.  And for free you take.

As noted earlier, there is no AGI phase out of benefits under Employer Education Assistance Programs.  More information on this benefit, excerpted from the relevant IRS Publication, Publication 970, is available from my Web site by clicking on Educational Savings.