My employer is helping me pay for my Master's Program in Computer Science. My employer has included the reimbursements (about $2,000) to me for my schooling within my wages on my W-2. Since I studied Accounting for my undergrad, pursuing a computer science degree qualifies me for a new skill/trade which means that this amount is generally taxable. However, based on IRS Publication 970 ch. 11, it appears that there is a threshold of $5,250 that is tax free, then the amounts beyond that are taxable (but also wouldn't be taxable if I meet the Working Condition Benefit - which I do not).

Should the $2,000 in employer provided education assistance be included as my income?

1 Answer 1

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 those bene-
fits with your wages, tips, and other compensation shown
in box 1 of your Form W-2. This also means that you do
not have to include the benefits on your income tax return.

It would seem they should not have included it. Show them the citation you led me to, Pub 970 Ch 11

  • I agree, show your HR department the citation and ask they adjust you statement. Mar 31, 2014 at 3:38
  • 1
    Make sure they have an Educational assistance program. From the same chapter "To qualify as an educational assistance program, the plan must be written and must meet certain other requirements. Your employer can tell you whether there is a qualified program where you work." If it does not have a written qualified plan the amount will be taxable. Mar 31, 2014 at 13:03
  • Nice catch! And you are welcome to edit the details into my answer if you wish. Mar 31, 2014 at 13:29

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