4.1. ERMUSR 05-12-2009 - Laserfiche WebLink

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Educational Assistance This exclusion applies to educational assistance you pro- vide to employees under an educational assistance pro- gram. The exclusion also applies to graduate level courses. Educational assistance means amounts you pay or in- cur for your employees' education expenses. These ex- penses generally include the cost of books, equipment, fees, supplies, and tuition. However, these expenses do not include the cost of a course or other education involy- ing sports, games, ar hobbies, unless the education: • Has a reasonable relationship to your business, or • Is required as part of a degree program. Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. Nor do they include the cost of lodging, meals, or transportation. Educational assistance program. An educational assis- tance program is a separate written plan that provides educational assistance only to your employees. The pro- gram qualifies only if all of the following tests are met. • The program benefits employees who qualify under rules set up by you that do not favor highly compen- sated employees. To determine whether your pro- gram meets this test, do not consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. • The program does not provide more than 5% of its benefits during the year for shareholders or owners. A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. • The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance. • You give reasonable notice of the program to eligible employees. Your program can cover former employees if their employ- ment is the reason for the coverage. For this exclusion, a highly compensated empioyee for 2008 is an employee who meets either of the following tests. 1. The employee was a 5°i° owner at any time during the year or the preceding year. 2. The employee received more than $100,000 in pay for the preceding year. You can choose to ignore test (2) if the employee was not also in the top 20°i° of employees when ranked by pay for the preceding year. Employee. For this exclusion, treat the following individu- als as employees. • A current employee. • A former employee who retired, lefit on disability, or was laid off. • A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your pri- mary direction or control. • Yourself (if you are a sole proprietor). • A partner who performs services for a partnership. Exclusion from wages. You can exclude up to X5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. Assistance over $5,250. If you do not have an educa- tional assistance plan, or you provide an employee with assistance exceeding $5,250, you can exclude the value of these benefits from wages if they are working condition benefits. Property or a service provided is a working condi- tion benefit to the extent that if the employee paid for it, the amount paid would have been deductible as a business or depreciation expense. See Working Condition Benefits, later. Employee Discounts This exclusion applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment {such as stocks or bonds). Employee. For this exclusion, treat the following individu- als as employees. • A current employee. • A former employee who retired or left on disability. • A widow or widower of an individual who died while an employee. • A widow or widower of an employee who retired or left on disability. • A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your pri- mary direction or control. • A partner who performs services for a partnership. Exclusion from wages. Yau can generally exclude the value of an employee discount you provide an empioyee from the employee's wages, up to the following limits. • For a discount on services, 20°ro of the price you charge nonemployee customers for the service. • For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. Determine your gross profit percentage in the line of business based on all property you offer to customers Publication 15-B (2008) Page 9