LO 8.3.2: Describe employer assistance programs available for employees’ education expenses.

Question 1

What is the Section 162 employee benefit?

Answer 1

• An employer may provide an unlimited amount of educational assistance to an employee so long as this assistance is job related.
• Made part of an employer’s deductible ordinary and necessary business expenses under IRC Section 162.

Question 2

How much non-job-related educational assistance can an employer provide to an employee during any one year?

Answer 2

Up to $5,250 as a tax-free employee benefit under IRC Section 127.

Question 3

Can the IRC Section 127 non-job-related educational assistance program be granted for undergraduate or graduate study?

Answer 3

Yes, May be granted for undergraduate or graduate study.

Question 4

What is the IRC Section 127 non-job-related educational assistance limited?

Answer 4

• Limited to the lesser of
  
  • the amount of qualifying educational expenses (defined as tuition, fees, books, supplies, or equipment) or
  • $5,250 in any given year.