Yes! Potentially, in two different ways. Here’s how.

Payments for Job-Related Education

Your business can reimburse an employee for certain education expenses, and the reimbursements will be treated as tax-favored working condition fringe benefit payments.

For the employee, that means the reimbursements are free of any federal income tax hit or federal employment tax hit. Nice!

For your business, that means the reimbursements are deductible as employee compensation expense. Also nice!

This favorable federal tax treatment is generally allowed if

the education is required by your business, or by law or regulation, for the employee to retain his or her current job; or

the education maintains or improves skills required in the employee’s current job.

More good news. When the preceding tests are passed, this favorable tax treatment is available for any employee, including one who happens to be related to the employer’s owner, such as your 22-year-old employee-child.

Favorable working condition fringe benefit tax treatment is also available when your business pays for education that passes the preceding tests by making direct payments to the educational institution on behalf of the ... Log in to view full article.