Tuition Aid Repayment
cwildrick
2 Posts
Our company is looking at its current Tuition Aid Policy to determine if it is in alignment with industry standards and legally binding as it relates to reimbursement should the employee voluntarily separate from the company within a specified time period after completing the program/course work.
Under IRS regulations, an employer can pay up to $5,250/year in tuition aid and it is non-taxable to the employee.
Lets say the company reimburses an employee $10,000 in one year for the employee’s tuition. Of that $10,000, $5,250 is non-taxable to both the employee and employer, and $4,750 is taxable income to the employee. Under the policy, it states if the employee separates from the company within two years from completing the course/program, he/she is responsible for reimbursing the company 100% of the $10,000.
Is the company entitled to reimbursement of $10,000? Or, is it only entitled to reimbursement of $4,750
($10,000 - $5,250 = $4,750)?
Can an employer legally collect tuition reimbursement monies paid to an employee that is classified as non-taxable (up to the first $5,250) if the employee signed a Tuition Reimbursement Agreement and separates from the company within the repayment period?
Under IRS regulations, an employer can pay up to $5,250/year in tuition aid and it is non-taxable to the employee.
Lets say the company reimburses an employee $10,000 in one year for the employee’s tuition. Of that $10,000, $5,250 is non-taxable to both the employee and employer, and $4,750 is taxable income to the employee. Under the policy, it states if the employee separates from the company within two years from completing the course/program, he/she is responsible for reimbursing the company 100% of the $10,000.
Is the company entitled to reimbursement of $10,000? Or, is it only entitled to reimbursement of $4,750
($10,000 - $5,250 = $4,750)?
Can an employer legally collect tuition reimbursement monies paid to an employee that is classified as non-taxable (up to the first $5,250) if the employee signed a Tuition Reimbursement Agreement and separates from the company within the repayment period?
Comments
Have you heard of using the IRS Section 132 Working Condition Benefit rules for tuition reimbursements? This is an alternative to the Section 127