The Internal Revenue Service (IRS) requires that employees receiving education or training benefits (including tuition reimbursement) at or above $5,250 in a calendar year must pay income tax on the benefits above that amount. Below are some common questions asked that can help you understand if this IRS rule applies to you.

How do I know if this applies to me?

• The value of your training/education classes must total up to or exceed $5,250 in a calendar year.  Keep in mind that you may get reimbursed for a fall semester class in the following calendar year.  In this case, the amount will count in the year you receive it and not the year you took the class.
• You must be enrolled in the training/education classes intended to advance your skills and to lead you to an advanced job.  For example, members seeking a two or four year degree, license, and some certificate programs intended for advancement will be included in this category.
• Costs associated with training/education intended for general use and betterment of your skills at your current job, or to assist you in getting a job at level similar to what you currently have, will not be reported as taxable income.

Will I get notified if my training/education benefits fall into this category?

• Yes, you will receive notification from the Training Fund.
• In addition, if your education benefit exceeds $5,250 in a calendar year the following January you will receive a Form W-2 form in the mail that must be used as part of your tax return filing.

How much will this cost me in taxes?

• It will depend on your total income and will vary from person to person.
• You will only pay taxes on benefits above the $5,250 amount.  For example, if you received $7,000 in benefits you will be taxed on $1,750.  Taxes will be withheld from your reimbursement checks once it is determined you have exceeded the $5,250 benefit level. Just like an employer, taxes withheld will be based on your Form W-4 – Employee’s Withholding Allowance Certificate – which determines federal withholding tax on your paycheck.