What if your employer over-taxes your amount for the educational assistance benefit? Example: taxed to the max for 6k student loan payment.

Forum|Forum|3 years ago
June 7, 2022
3 replies
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Current law says only the amount over $5,250 should be taxed, therefore, a $6K payment should only be taxed at $750 (the delta). How do you get the money back on your taxes?

TurboTax Self Employed Online

SweetieJean

Employee

What do you mean by overtaxed? Are you saying the employer withheld excess taxes? And did you use that benefit to repay student loans rather than on tuition, etc?

oneal-sheila3Author

Meaning they are taxing the 6k like it is income. They are sending a check directly to my lender, but not portioning the amounts out, like IRS says.

SweetieJean

Employee

Also, please clarify your situation. You talk about an employer, but you are asking from TT Self-Employed.

Hal_Al

Employee

Q. How do you get the money back on your taxes?

A. You talk to your employer.

There's is nothing you can do, to correct that, in the filing of your tax return. The employer's plan must meet IRS requirements (section 127). Then the employer treats it as a tax free benefit on your W-2.

https://thecollegeinvestor.com/33583/employer-student-loan-assistance-tax-free/#:~:text=Section%202206%20of%20the%20CARES,both%20the%20employee%20and%20employer.

Also note the $5250 limit applies to combined tuition and loan payment assistance.