By Jason Watson (Google+)
We couldn’t complete our series of education tax benefits without giving honorable mention to employer paid education assistance. If you are lucky enough to have an employer who provides education assistance, some of it can be treated as tax free. According to the tax rules, if an employer gives an employee something of monetary value, it’s typically included and taxed as income. This is one of those rare exceptions.
You can exclude up to $5,250 a year for employer paid tuition assistance from your income. The money must be used for qualified education expenses at post-secondary schools and includes graduate programs. That would include tuition, fees, supplies, and books. While the IRS insists that you don’t need to take courses related to your job, for sports minded individuals and hobby enthusiasts, tuition involving those types of courses do not qualify for the exclusion.
Also, if you own an LLC and have your kids on the payroll, you can design an educational assistance program where your company picks up the tab. S Corp owners have more rules unfortunately. Contact WCG (formerly Watson CPA Group) for more information or check out this link-