When Should You Provide Employees Education?

  1. When is providing an education fringe benefit advantageous to the employer? I know other employers who give their employees financial help to attend college or higher education courses. Also I think some of my employees would like to take some courses at the community college. What kind of educational assistance should our company be giving employees?”
  2. Let’s start with the law in this area. The tax laws allow you to deduct, as a business expense, any education expenses you pay out to employees for education or training which is job-related.

So there is an advantage to you and your business when you set up an education expense reimbursement program to encourage employees to take job-related training. Your employees will become more productive and more valuable to you and your business.

Next, you have to decide if you want to go beyond offering assistance just for job-related subjects. Questions to ask:

  • Do some of your employees need to get continuing education to keep up their professional accreditation? You could offer financial assistance for all or part of this education. (Usually, keeping up legally required continuing education is the employee’s responsibility.)
  • Do you want to encourage some of your employees to attend workshops and seminars? In this case, if the subject matter is not directly job-related, financial help that you provide is not tax-deductible to your business.
  • Do you want to tie education assistance to the employee’s length of employment with your organization and to the number of hours an employee works for you each week? For example, you may want to offer assistance only to employees who have worked for you at least one year. And you may want to offer only partial reimbursement to employees who work fewer than 30 hours a week.

Note: The questions about when education assistance and reimbursement of education-related expenses are deductible to your business, and when they are deductible to the employee, can get complicated. Consult with your tax adviser to review any educational assistance program you consider adopting.

In general, education expenses are deductible when:

  • They are incurred to maintain or improve skills used in the existing job; and
  • When the education or training is taken to meet requirements of the employer or the law to retain the employee’s salary, status or employment.

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