Make your website tailored for tuition reimbursement companies

Educational Assistance Plans An employer can offer a Sec. 127 educational assistance program that gives each participating employee up to $5,250 in annual tax-free reimbursements. The employer can deduct the costs of operating a Sec. 127 plan as a business expense without owing any federal payroll taxes.

Under federal tax law, each year you can be reimbursed from your employer for up to $5,250 in tax-free tuition. This means that you donʼt need to report tuition reimbursement up to this limit on your federal income taxes, provided your company has a written policy that adheres to all federal tax guidelines.

There are no fixed limits on tuition reimbursement. Employers can contribute however much they want. Many employers set their limit at $5,250 per year the maximum amount they can deduct from their taxes. However, employers who are especially motivated to train their workforce may be willing to contribute more.

Employee tuition reimbursement is a company-sponsored benefit that covers some or all of the costs associated with an employeeʼs college coursework. In a reimbursement program, the employee pays for their courses upfront, and the employer pays back either a portion or the full cost upon completion.

You may have to pay back your company if you leave your job before or shortly after completing courses. Review your tuition reimbursement terms and contract, including the fine details. Some might require you to stay with the company for a set number of months or years upon course completion.

If youʼre wondering how it works, itʼs simple: You decide on the approved programs (or give your employees free rein). They pay their tuition at the beginning of the term. They stay with your company for the course duration. They submit their grades and receipts. You process the reimbursement through payroll.

In most cases, prior approval is required from your employer before enrollment. Youʼll also want to confirm whether your employer requires you to remain employed for a specified period after the course is completed. Make sure you check with HR so youʼre not left with unexpected tuition obligations.

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.