IRC 127: Educational Assistance
Up to $5,250 of Employer paid educational assistance provide to employees in excluded from taxable wages. Graduate level courses are included in this exclusion. Expenses include the cost of books, equipment, fees, supplies and tuition. The exclusion doesn’t apply to the cost of education involving sports, game, hobbies UNLESS the education has a reasonable relationship to the employers’ business or is required as part of the degree program. Excludable expenses do not include tools or supplies that the student/employee is allowed to keep at the end of the course (other than textbooks), nor does it include the cost of lodging, meals or transportation.
IRC 132(b): No-Additional-Cost Services
A service provided to an employee may be excluded from taxable wages if it does not cause the employer to incur any substantial additional costs. The service must be offered to the customers in the ordinary course of the line of business in which the employee performs substantial services.
These types of services are generally excess capacity services, such as airline, bus, or train tickets, hotel rooms, or telephone services provided free or at a reduced price to employees working in those lines of business.
IRC 132 (d): Working Conditions Benefits
The value of property of services provided to employees so that the employee can perform his or her job is excluded from taxable wages. The rule applies to the extent that the employee could have deducted the cost of property or service as a business expense if he or she has paid for it. An example of a working condition fringe benefit is a company car used by the employee for business.
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