Page 32 - BusinessWest August 8, 2022

A Class Act
An Educational Assistance
Program Can Bring
Many Benefits
By Keara Moulton
Educational assistance programs provide access to learning opportunities for staff members to gain new skills and main- tain up-to-date knowledge in their field with financial assis-
tance from their employer.
This is a commonly offered employer benefit, but not all business
owners might be aware of the current opportunity to expand this offering.
The CARES Act of 2020 included an expansion of Section 127, which allows employers to expense payments to employee student loans in addition to previously allowed payments on tuition, fees, books, and supplies. This expansion was extended through Dec. 31, 2025 by the Taxpayer Certainty and Disasters Tax Relief Act.
Whether your business already has an educational assistance pro- gram in place or you are considering providing one as a benefit soon, this can be a great recruitment and retention program. With the expan- sion to include public and private student-loan payments toward both principal and interest, employers have the potential to provide educa- tional assistance not only to employees currently enrolled in courses, but also to recent graduates who are already making monthly pay- ments using their post-tax income.
“Whether your business already has an educational assistance program in place or you are considering providing one as a benefit soon, this can be a great re- cruitment and retention program.”
To qualify as an educational assistance program, the plan must be written, accessible to all employees, and spell out what the money
can be used for. The business can either directly pay the educational institution or student-loan servicer on behalf of the employee, or they can pay the employee directly and then potentially request a receipt of employee payments if their specific written plan requires it.
If the total payments for educational assistance are under $5,250, the employee will not be taxed on this additional benefit. However, if the payments for tuition and loan assistance exceed $5,250, the employee would then pay taxes on the overage as it would now be included in box 1 of their W-2.
Recently, we had a local business reach out to inquire about the potential implementation of an educational assistance program that takes advantage of this expansion of Section 127. One of their key questions was ‘is this something you think we should offer to employ- ees, knowing that we handle payroll in house using QuickBooks?’ Ease of implementation to process this pre-tax contribution will vary with the type of QuickBooks product the business uses (i.e. desktop or online).
QuickBooks payroll will need to be set up to accept and track the payments by going through the CARES Act section to check off the applicable pay items to include. With this expansion available through 2025, your employees can benefit from it for more than three years if your bookkeeper can adapt your program to your payroll system now.
CREATING COMMUNITY THROUGH DESIGN SINCE 1985
Ludlow Senior Center - Ludlow, MA
An Employee & Woman Owned Company
55 Frank B. Murray Street, Suite 201 Springfield, MA 01103 413.733.6798
www.dietzarch.com
DESIGN THAT LOOKS GOOD, DOES GOOD.
DIETZ
CO. Architects
This fringe benefit does mean that employees who receive this money will not be able to claim any of the tax-free education expenses (the amount received under $5,250) as the basis for another deduc- tion or credit on their 1040 tax return. This
includes the Lifetime Learning Credit and
Student Loan Interest Deduction. How-
Assistance
32 AUGUST 8, 2022
EDUCATION
BusinessWest
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