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Starting Your BusinessWhat are Business ExpensesEducational ExpensesIf you pay or reimburse education expenses for an employee enrolled in a course not required for the job or not otherwise related to the job, deduct the payment as wages. You must include the payment in the employee's wages, and it is subject to FICA and FUTA taxes and income tax withholding. However, these rules may not apply if the payment is part of a qualified educational assistance program. Deduct the payments on the employee benefit programs line of your tax return or business schedule if they are part of a qualified educational assistance program. For information on educational assistance programs, see Educational Assistance in Publication 15-B. If you pay or reimburse education expenses for an employee enrolled in a job-related course, you can deduct the payment as a non-compensatory business expense. Since this expense would be deductible if paid by the employee, it is called a working condition fringe benefit. Do not include a working condition fringe benefit in an employee's wages. Working condition fringe benefits are discussed in more detail in Publication 15-B. For more information, see Education Expenses in Publication 970.
Publication 15-B Employer's Tax Guide to Fringe Benefits |