angela bennett is an employee at coopers and smith cpa firm. Angela, a part-time student, is working on her graduate degree in history. Coopers & Smith which has an educational assistance program reimburses Angela $6,000 of her educational expenses she incurred in the year. What amount, if any, of Coopers & Smith's reimbursement will be included in Angela's income
To determine the amount of Coopers & Smith's reimbursement that will be included in Angela's income, we need to consider the tax rules related to employer-provided educational assistance.
According to the IRS, if an employer provides educational assistance to an employee, up to a maximum of $5,250 can be excluded from the employee's income and not subject to taxation.
In this case, Coopers & Smith reimbursed Angela $6,000 for her educational expenses. However, since the total amount exceeds the maximum exclusion limit of $5,250, the portion that exceeds the limit will be included in Angela's income.
To calculate the amount included in Angela's income:
1. Subtract the maximum exclusion limit ($5,250) from the total reimbursement ($6,000): $6,000 - $5,250 = $750.
Therefore, $750 of Coopers & Smith's reimbursement will be included in Angela's income and will be subject to taxation.