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Article | Insider

IRS issues FAQs on educational assistance programs

By Benjamin Lupin and Kathleen Rosenow | June 26, 2024

The nine FAQs cover educational assistance programs, qualified educational loans, student debt, non-discrimination requirements and other key related information.
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The IRS recently issued Fact Sheet 2024-22 containing a set of FAQs related to educational assistance programs under Internal Revenue Code section 127. Generally, employees may exclude certain educational assistance benefits from their gross income if provided under a written employer-sponsored educational assistance program (up to $5,250 per calendar year).

There are two types of educational assistance benefits available via an educational assistance program:

  1. Payments for tuition, fees and similar expenses, books, supplies and equipment
  2. Principal or interest payments on qualified education loans (e.g., student loans) made by the employer after March 27, 2020, and before January 1, 2026 (unless extended by future legislation)

The nine FAQs discuss educational assistance programs generally, qualified educational loans, student debt, non-discrimination requirements and exclusions from gross income for educational assistance other than under section 127. Although there is no new substantive information, the FAQs serve as a reminder of some of the existing IRS educational assistance guidance.

Note: The IRS issues FAQs to provide general information faster than through official guidance. FAQs may not address a taxpayer’s specific facts and circumstances, and they may be updated or modified upon further review. Because FAQs are not published in the IRS Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case. Similarly, if an FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer’s case, the law will control the taxpayer’s tax liability; however, a taxpayer who reasonably and in good faith relies on IRS FAQs may not be subject to a penalty.


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