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Tuition Reinbursement

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by al.olson 1 view

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My employer provides education benefits to its employees up to $5000 in a calendar year. Currently I'm enrolled in a masters program and taking advantage of this benefit, however my employer withholds 47% in taxes. According to the IRS document on"Employer-Provided Educational Assistance" (publication 970, pg33) the employer is not required to withhold taxes and it states that the benefit is tax free up to $5250.
Is there a way I can claim a deduction on my income tax that will allow me to reclaim some of this lost benefit?

4 replies

by thechas

I suggest that you talk with a tax consultant.

First, does your re-imbursment check stub list the tax withheld?

If not, then you need to verify that your employer is not "pocketing" the 47%

If you do not have formal proof of the exact amount sent to the IRS on your account, then you have no recourse.

Chas

by temalone3

Hi, my employer also maxes out at $5,000 per year and I too have taken full advantage of it. I've never had any taxes taken out of the checks and as far as I know, IRS does not tax graduate level reimbursement. Not sure why you would be getting hit with the witholding. Contact your HR representative !

by skht

I got tuition reimbursement for undergrad and graduate school, and was unpleasantly surprised to find out at the end of graduate school that I would have to pay taxes on that money. According to the accountant, undergrad is not taxed, anything considered graduate level is taxed as income. After sulking and filing my taxes, I found out that a guy in our building requires his employees to have an MBA. He told me that for accounting purposes, the way to get graduate-level education reimbursed tax-free by an employer is to get the employer to say that education is required as part of your job. I didn't really have that option, but you could look into it.

by apluspcnet

Open a company!!! Any hobby, career that costs you $$ you should open a company in. If you are going to school for MCSE, open a pc/network company. You can run in the red for 3 years without getting audited. At any rate, once the company is open, any training/edcucational expenses are at a 100% write off.

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