Tuition Reimbursement

Tuition Reimbursement Process

The process and specifics of this benefit differ from one employer to the next. Generally speaking, however, tuition reimbursement usually involves your employer reimbursing you for a defined amount of the educational expenses you encounter when pursuing continuing education courses and/or a college degree.

Often, there are specific employer guidelines that you need to meet in order to receive this benefit. For example:

• Your employer might require you to earn a minimum grade or maintain a minimum GPA in your coursework before reimbursing you.
• Your employer might limit approval of the courses or degree you enroll in to ensure that the education you are pursuing is related to your job or is required for you to receive a promotion at your company.
• Your employer might require you to remain at your company for a set amount of time after you receive tuition reimbursement benefits.

Tuition Reimbursement Tax Considerations

Tuition reimbursement provides a tax benefit for employers. According to the IRS’s Fringe Benefits Guide (2020), employers can offer employees $5,250 of educational assistance tax-free each year.

Employees can also deduct this amount as tax-free income that is being used for educational purposes. If you receive tuition reimbursement in excess of the tax-free amount defined by the IRS each year, however, it’s important to note that this money will be considered taxable income.