Starting Your Business/Keeping Tax Records
What are Business Expenses
Educational Expenses
If you pay or reimburse education expenses
for an employee enrolled in a course not required for the
job or not otherwise related to the job, deduct the payment
as wages. You must include the payment in the employee's wages,
and it is subject to FICA and FUTA taxes and income tax withholding.
However, if the payment is part of a qualified educational
assistance program, these rules may not apply. See
chapter 2 of Publication 535 Business Expenses.
If you pay or reimburse education expenses
for an employee enrolled in a job-related course, you can
deduct the payment as a non-compensatory business expense.
Since this expense would be deductible if paid by the employee,
it is called a working condition fringe benefit. Do not include
a working condition fringe benefit in an employee's wages.
Working condition fringe benefits are discussed in more detail
in chapter
2 of Publication 535 Business Expenses.
For more information, see Education
Expenses, chapter 16.
Examples
Important References
Publication
535 Business Expenses
Publication
508
Tax Benefits for Work-Related Education
Form
1040 Schedule C Profit or Loss from Business