Tuition Assistance Programs

Today TaxMama hears from Mike in the TaxQuips Forum, with a terrific question. Mike says, “My employer has asked me to look into finding out what is necessary to create a Tuition Assistance Program.  I read through Pub 970, and all I could find was that I needed to have the agreement in writing. What I can’t seem to find is what exactly is needed in writing, and if there is anything else we need to do to get one started. Also I see that that money doesn’t need to be reported as income for the employee, so then what does the employer deduct the expense as?”

Hi Mike,

 It’s a terrific benefit for employees.  Good idea! Then there’s the paperwork.

 Here are your options: 

1) You could write up a program yourself.

2) You could find someone else’s program and copy their document.

3) You could search around on the web to see if there is a boilerplate document.

4) You could have someone else provide a customized boilerplate document.

I found these three services that might suit you. Don’t know ANYTHING about them.

Scholarship Management Services

 http://www.tuitionmgr.com

http://scholarshipamerica.org

 How is the deduction taken?  As an employee benefit.  You can see that line on partnership and corporation tax returns on page 1 of the return.

And remember, you can find answers to all kinds of questions employee benefits, and other tax issues, free. Where? Where else? At www.TaxMama.com.

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