Tax Reminder: Student Loan Assistance
The IRS wants to remind employees and employers that companies which offer educational assistance programs can use them to help pay student loan obligations for their employees. This fairly new opportunity is only available for a limited time, so employees should take advantage now, while employers can also use it as an incentive to attract and retain workers.
Employer educational assistance programs have been around for many years, but the option to use them to pay an employee’s student loans has only been available for payments made after March 27, 2020 and will continue to be offered until December 31, 2025, under federal law. Traditionally used for books, equipment, supplies, fees, and tuition, the programs can now be used to pay principal and interest on qualified education loans. Payments can be made directly to the lender as well as to the employee.
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Tax-free benefits under such educational assistance programs are limited to $5,250 per employee per year. Any assistance provided above that amount is taxable as wages. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Klatzkin can help. For additional information call 609-890-9189 or click here to contact us. We look forward to speaking with you soon.