united-states employment tax-law
Can an employer pay for my education with pre-tax earnings?
<p>Since scholarships are not taxed by the government, can I request my employer to "pay" (compensate) me in scholarships, so that I do have taxes withheld or due on those wages that are going towards my college education?</p>

<p><strong>No</strong>.</p>

<p>From the IRS web page <a href="http://www.irs.gov/Charities-&amp;-Non-Profits/Private-Foundations/Company-Scholarship-Programs" rel="nofollow">Company Scholarship Programs</a>:  </p>

<blockquote>
  <p>Company scholarship programs will not qualify if grants are
  essentially providing extra pay, an employment incentive, or an
  employee fringe benefit.  Similarly, if scholarship programs are
  compensatory in nature, an organization administering such a program
  will not qualify for tax exemption because it is operated for private
  benefit.</p>
</blockquote>

<p>You are not the first person to think of this!</p>

<p><strong>Probably</strong>, up to $5,250 per year per employee, <em>if</em> the employer sets up a "Qualified Educational Assistance Plan" (a.k.a. a <a href="http://www.law.cornell.edu/uscode/text/26/127" rel="nofollow">section 127</a> plan) that doesn't disproportionately benefit "highly-compensated employees."</p>

<p>This, like most of the tax code, is grossly complicated.  If you or your employer want to look into all the rules and means of using this section to pay small amounts of education expenses with untaxed dollars then "QEAP" and "section 127" are the search terms to start with.</p>
