Many organizations want to help employees continue their education, pursue professional certifications, or develop new skills. They are often surprised to learn that employer-paid tuition and education expenses are generally taxable compensation for the employee unless specific exceptions apply. The tax code allows for two primary programs that organizations can implement to provide tax-free benefits to their employees. Understanding these options and when they should be used can help organizations support employee development while avoiding potential payroll issues. Educational Assistance Programs The first program is an educational assistance program (EAP) established under Section 127 of the Internal Revenue Code. This approach allows employers to provide up to $5,250 for each employee, per year, in educational assistance without the amount being included in the employee's taxable wages. One of the biggest benefits of this plan is that the education does not need to be rela...
This blog posts answers to questions given to us by ministers and others serving in Christian ministries advancing the gospel of Jesus Christ. It also discusses other financial topics that those in gospel ministries face. We trust the information provided can be helpful to you.