IRS Clarifies Policies on Tax-Free Educational Assistance Benefits

The Internal Revenue Service (IRS) has clarified regulations regarding the tax-free educational assistance that employees receive from their employers. In guidance published on June 17, the federal tax agency answered frequently asked questions pertaining to Section 127 of the Tax Code, which allows taxpayers to exclude certain educational assistance benefits from their gross income if they’re provided under an educational assistance program. Tax-free educational assistance benefits include payments for tuition, fees and similar expenses, as well as books, supplies, and equipment, the IRS explained, noting that the payments may be for either undergraduate- or graduate-level courses, which don’t have to be work-related....