</p>
<p>Education Working Condition Fringe Benefit – Section 132(d)</p>
<p>Job-related educational expenses may be excludable from an employee’s income as a working condition fringe benefit. A working condition fringe benefit (discussed in detail in section 3) is an excludable benefit of property or services provided by an employer to an employee that, if the employee had paid for it, could have been deducted as an unreimbursed employee business expense on Form 1040. The exclusion is generally available for any form of educational instruction or training that improves or develops the job-related capabilities of an employee. IRC §132(d); Reg. § 1.162-5</p>
<p>For governmental entities, working condition fringe benefits for education may be available to current employees or independent contractors. For purposes of working condition fringe benefits, independent contractors, directors and partners, and volunteers are considered employees. Reg §1.132-5(r) Reg §1.132-1(b)
For educational reimbursement to qualify as a working condition fringe benefit, the education must be job-related. It is not required that the employer have a written plan or dollar limitations, and the employer may discriminate in favor of highly-compensated employees. IRC §132(d); Reg. §1.132-1(f)(1)</p>
<p>Job-Related</p>
<p>The educational course must be job-related, and either maintain or improve job skills, or be expressly required by the employer or by law.</p>
<p>Examples of qualifying (excludable) courses include work toward an advanced degree necessary to retain the job or pay level. IRC §132(d); Reg. §1.162-5(a)(1)</p>
<p>To be excludable, the educational course must not:</p>
<p> Be needed to meet the minimum educational requirements of the current job, or
Qualify the employee for a new trade or business. Reg. §1.162-5(b)(2); Reg. §1.162-5(b)(3)
Substantiation Requirements for Cash Payments to Employees</p>
<p>If an employee receives cash, the employer must require the employee to:</p>
<p> Use the amount provided for payment of education expenses that qualify as a working condition fringe benefit,
Verify that the payment was actually used for such expenses, and
Return to the employer any unused portion of the payment. Reg. §1.132-5(a)(1)(v)</p>
<p>Qualifying Educational Expenses</p>
<p>The following may qualify for exclusion as working condition fringe benefits:
Tuition, books, supplies, equipment Reg. §1.162-6
Certain travel and transportation costs Reg. §1.162-5(d)
Graduate or undergraduate level courses Reg. §1.162-5(a)</p>
<p>