Getting educational assistance? Know your tax implications

Posted Mar. 13, 2019 by

With tax season ending right around the corner, OCSEA members who used their Union Education Trust (UET) fund money last year to go back to school or get training may have tax implications for tax year 2018.

The good news is, under the IRS code, employer-paid educational assistance (i.e., UET, other state employer funds) is tax exempt up to $5,250. That means, no taxes are due if, in 2018, an OCSEA member received $5,250 or less in educational assistance benefits.

However, any amount over that sum for non-work related educational assistance is considered income and may be subject to income tax. For example, if an eligible OCSEA member uses $3,000 on college during the first part of 2018, say for Spring classes, and then uses an additional $3,000 in the fall of 2018 (the UET fund resets on July 1), for a total of $6,000, then an OCSEA member would need to pay income taxes on $750 ($,6000 minus $5,250 equals $750).

There is an exception to this, however. Work-related educational assistance is NOT taxable in any amount. So, if a member uses UET and designates the courses as “work-related” education or training, no amount would be taxable and the member would have no tax liability.

Please note, the educational assistance MUST be designated as “work-related” at the time of applying for a voucher or reimbursement. In order to designate a course as “work-related,” UET participants can submit the Educational Benefit Tax Exemption Form when they apply for their UET benefit. Go here to download that form. Your HR Department can determine if the course is “work related.” Read the Frequently Asked Questions flier (PDF) about the tax exemption process.

If you are a high user of education benefits, particularly work-related educational assistance, we highly recommend that you take advantage of the tax exemption moving forward.

For questions, call 1-866-436-7900 or email