Identification

• Whether you take courses leading to a degree or not usually does not impact you eligibility to receive tax-free tuition assistance from your employer. For instance, you can take a course in business management whether or not it leads to an MBA degree. As of 2010, the IRS allows taxpayers to receive up to $5,250 in tuition assistance tax-free, as long as the funds pay for tuition, fees, books and supplies required by the institution as a condition of enrollment. Room, board and materials you keep after the class do not count as a qualified expense.
  
  

Taxable Courses

• In general, you cannot use tuition assistance to pay for courses involving hobbies, games or sports, unless your degree plan requires them. However, you may be able to take one of these classes as a non-degree course, if it pertains to your business. For example, if you are a high school soccer coach, you probably can use tuition assistance to take collegiate soccer coaching courses.
  
  

Basic Requirements

• Whether a course is part of a degree program or not does matter if you fail to meet the basic requirements of the employer-paid tuition exclusion. You can only exclude $5,250 of employer-paid tuition from your income in any one year. If you work for two employers, for instance, you cannot double the amount of excluded tuition assistance. If the employer offers a tuition assistance program, it cannot favor highly-compensated employees. In 2009, highly compensated employees were those making $110,000 a year, placing in the top 20 percent of earners at the company.
  
  

Tip

• Your employer probably knows whether its tuition assistance is taxable or not. You may need an accountant to help you determine if tuition assistance above the regular exclusion limit is a working condition fringe benefit. If you could otherwise deduct education as a business expense, your employer can reimburse you for tuition tax-free for any amount. Also, only the employee can receive tuition assistance. Your wife, for example, cannot receive non-taxable tuition assistance from your employer.