Reimbursements to employees for job-related training are not taxable or reportable. To qualify as job-related, the training must be:
- required by the employer or required as a condition to the retention of an established position or status (e.g., continuing professional education courses), or
- taken to maintain or improve skills required in the employee’s present position.
In addition, the training cannot be required to meet the minimum educational requirements for the employee’s position or qualify the employee for a new trade or business. All other training is considered career-related.
Graduate and Undergraduate career-related tuition reimbursements are not taxable or reportable for tax reporting purposes unless they exceed $5,250 in a calendar year. When the payments exceed $5,250 the excess over $5,250 is the only part reported by Accounting Services to the Human Resources System (HRS) and appropriate federal, state, and FICA taxes to will be withheld. Only the excess over $5,250 will be included in gross income on employees’ W-2 forms.