IRS and Treasury Release FAQs on Educational Assistance Programs

18 June 2024


The Internal Revenue Service (IRS) has released a set of frequently asked questions (FAQs) in FS-2024-22, addressing educational assistance programs.

Taxpayers can exclude specific educational assistance benefits from their gross income if these benefits are provided through an educational assistance program. Such benefits encompass payments for tuition, fees, books, supplies, equipment, and principal or interest payments on qualified education loans made by employers between March 27, 2020, and January 1, 2026 (unless extended by future legislation).

Taxpayers can exclude up to $5,250 of educational assistance benefits per calendar year from their gross income. Employers should not report these benefits as wages, tips, or other compensation in box 1 of Form W-2.

However, any tax-free education expenses cannot be used for other deductions or credits, including the lifetime learning credit. If benefits are received under a program that does not meet the Internal Revenue Code's requirements for educational assistance or if they exceed $5,250, they may still be excluded if specific criteria are met.

Employers can generally deduct amounts paid under an educational assistance program as a business expense.

For more information, please contact a member of our Tax Team

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