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What is it called when a company pays for your education? Tuition reimbursement or tuition assistance are programs wherein a company pays for some or all of the costs of a workers higher education, which many employers offer to their employees as part of their benefits package.
If you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. This means your employer should not include the benefits with your wages, tips, and other compensation shown in box 1 of your Form W-2.
Under Section 127 of the Internal Revenue Code (IRC), employers are allowed to provide tax-free payments of up to $5,250 per year to eligible employees for qualified educational expenses. To be considered qualified, payments must be made in ance with an employers written educational assistance plan.
Yes, if you receive a Form 1098-T, any financial aid received during the tax year will be displayed in Box 5. Note that if your tuition and fees were entirely covered by financial aid, you will not receive a Form 1098-T.
Anything above $5,250 is generally considered as taxable income. However, there are some exemptions. If you receive assistance over $5,250 it is excluded from your income if the education is a qualified, working-condition, fringe benefit.
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People also ask

Payments from all GI Bill programs are tax-free. This is true for you, your dependents, and your survivors.
Employers are allowed to provide up to $5,250 in educational expenses as a tax-free fringe benefit to their employees. This includes undergraduate and graduate-level courses. Anything above $5,250 is generally considered as taxable income.
A scholarship/fellowship used for expenses other than qualified expenses is taxable income. Taxable scholarships/fellowships are generally referred to as stipends and are payments for which no services are rendered or required.

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