The National Directory of Certified Public Accountants

Ask A CPA - Educational Tax Benefits

Educational Assistance Plans

You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. Graduate school expenses qualify as well as undergraduate courses. Payments are tax free provided that the courses do not satisfy the employer's minimum educational standards and do not qualify the student for a new profession. Educational assistance means amounts you pay or incur for your employees' education expenses. These expenses generally include the cost of books, equipment, fees, supplies, and tuition. These expenses do not include the cost of a course or other education involving sports, games, or hobbies, unless the education has a reasonable relationship to your business, or is required as part of a degree program. Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. They do not include the cost of lodging, meals, or transportation.

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