Helping employees keep their skills current has benefits for employers and employees alike. Organizations that offer tuition reimbursement programs find it easier to hire and retain top talent, and up-skilling can be more cost-effective than hiring new staff.
Another major benefit of education assistance is that it can provide tax savings for the employer and participating employees. Under Internal Revenue Code Section 127, employers can deduct up to $5,250 per employee for tuition reimbursements made through qualified education assistance programs (EAPs).
According to one recent study, as many as 92 percent of companies have some type of educational benefit program. Learn more about employer tuition reimbursement, how to take advantage of your employer's program, and steps you can take if your employer does not currently have a tuition reimbursement program.
In addition to attracting top workers, tuition reimbursement benefits help employers reduce turnover. In the case of Cigna, every $1 spent on education assistance equaled $1.29 saved on talent management costs. Tuition reimbursement programs also give employers a way to reduce their tax burdens.
Tuition assistance, or tuition reimbursement as it is also known, is an employer-provided employee benefit. This process is a win-win for your workplace and for you. In a tuition-assistance program, an employer pays all or part of an employee's cost to attend college or university classes.
If your employer pays more than $5,250 for educational benefits for you during the year, you must generally pay tax on the amount over $5,250. Your employer should include in your wages (Form W-2, box 1) the amount that you must include in income.
Most employers do report tuition reimbursement, which the IRS considers a fringe benefit. However, the IRS allows taxpayers to deduct a considerable amount and the value of the benefit may not appear on your W-2.
Companies legally protect themselves by making employees pay back reimbursements if the employee leaves the company within a specific time frame of completing the education.
Organizations use different techniques for reimbursing student employees. The majority (87%) reimburse after the end of study. The most common reimbursement amount to employees is $5,000 to $5,999, foundation researchers said.
Through tuition assistance or reimbursement benefits, an employee could learn new skills and become a reliable asset to their organization, with less stress about how to pay for it. ... At many organizations that offer education benefits, fewer than 5% of employees take advantage of these programs, according to SHRM.
As of 2016, if an employer provides $5,250 or less in tuition reimbursement annually to an employee, that money is tax-free. Additionally, the employee does not need to claim this money on their W-2. ... The money can only be used towards tuition, fees, and school supplies (including books).
8 BENEFITS OF PRIVATE TUITION FOR STUDENTS
The UPS Earn & Learn Program, gives students the opportunity to bring their career goals to fruition through part-time work and tuition assistance. This education assistance program allows our part-time employees to earn up to $25,000 for their college education*.
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