A Tuition Assistance Program is a program, generally run through an
employer’s human resources department, whereby employees can take
college courses (undergraduate or graduate) paid for by that employer.
From a tax perspective, you can exclude up to $5,250 of educational
assistance benefits each year. This means your employer will not include
those benefits with your wages, tips, and other compensation shown on
your Form W-2. This also means that you do not have to include these
benefits on your income tax return.
Before can you take advantage of employer-sponsored tuition
assistance, you must be able to identify whether there is a qualified
program where you work, or not. Typically, education assistance benefits
are administered through an employer’s human resource department. Asking
your HR representative would be the best place to inquire about the
written policy regarding tuition assistance. Ask for a copy. If they do
offer a tuition assistance program, the information will be written
down, as it is a governmental requirement for any employer who chooses
to administer a qualified tuition reimbursement program.
The clearer the policy, the better for you to take advantage of it
appropriately. Keep in mind, the amounts and types of tuition
assistance differ, depending on the company. Some employers develop
their own educational programs while others outsource to colleges and
universities. One company may cover the full cost of tuition while
another might cap reimbursement at a dollar amount. If paying upfront is
a challenge for cash-strapped employees, the bursar's office may allow
for partial tuition payment with a letter from the employer.
Here are some key questions you’ll want to have ready to ask
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