- Reimbursement programs must be written down and include all employees. They cannot favor owners, highly compensated employees or their relatives. Tuition programs provided as part of a union contract are excluded from this restriction. The program can require that you receive a certain grade, work for the employer for a set number of years or take business-related courses.
- You may use your employer's tuition program to pay for tuition, fees, books and supplies directly related to your coursework. You cannot use the money for transportation or meals. Non-academic courses on sports, hobbies or games are not allowed unless they are directly related to the employer's business or required by your degree program.
- As of 2010, reimbursement up to $5,250 is not taxable. In addition, amounts over the limit are not taxable if they are specifically related to your employer's business operations. These amounts are not part of your wages and will not appear as taxable income on your W-2 form.
- Educational expenses that are reimbursed cannot be included in the calculations for any additional tax deductions or credits, such as the lifetime learning credit or tuition and fees deduction.
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