[...] However, as a result of the [...] CARES Act (Section 2206, Exclusion of Certain Employer Payments of Student Loans) and subsequent Consolidated Appropriations Act, 2021 (Section 120, Exclusion for Certain Employer Payments of Student Loans), Internal Revenue Code 127 (IRC 127) was expanded to include student loans in the definition for educational assistance and authorized relief of taxes related to some educational assistance.

What does this mean for you?

Up to $5,250 of employer payments of student loans is non-taxable in calendar year 2021, for both payroll and income tax purposes. This benefit only applies to student loan payments made after December 31, 2020 but before January 01, 2026. Only the [employer student loan payment] contribution amount in excess of $5,250 will be counted as taxable income and included in your federal taxable gross wages.

The table below specifies the tax treatment applied to your 2021 [employer student loan] payment:

Lender Information
Total Student Loan Benefit	$ XYZ
Lender	Name of Lender
Total amount sent to Lender	$ QRS
Date amount sent to Lender	MM/DD/2021
Federal Income Tax
Federal taxation of the total amount:
Non-Taxable	Amount no taxes were withheld	$ 5,250.00
Taxable	Amount taxes were withheld	$ XYZ - $5,250

KrisD15

This sounds like your employer paid more than 5,250 towards your loans.

I read this as your employer saying that they excluded 5,250 from your wages but included the excess.

Is that what happened? Did they pay more than 5,250 so included the difference as income? if that is the case, there is nothing you need to do because your W-2 has already accounted for that 5,250 by not including it in your income.

It sounds to me that they are just letting you know that they aren't reporting the 5,250 but explaining that they did need to include the amount that was over 5,250.

Only the [employer student loan payment] contribution amount in excess of $5,250 will be counted as taxable income and included in your federal taxable gross wages.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"