A college degree is valuable, but nowadays, it seems like you need a Masters, PhD, or MBA to stand out in the business world. As an employee, you want to better yourself with that degree and accomplish more. As an employer, you want the most talented employees out there, especially those with specialized degrees in your field. The question that many companies are facing today is whether or not to pay for its employees to receive higher education.
Higher education can range from a community college level to a university. Offering education benefits is something that can be very valuable to current and potential employees. Giving them a chance to learn and better themselves for their job and overall career is something that is very appealing.
For some companies, educational benefits work well, but not all ways are for everyone.
Typically, companies are nervous that once the employee completes the education course, they will leave their position and move on to a different jobs. If a company is making an investment in an employee, it certainly wants to see its money pay off. In order to prevent premature leaving, some companies attach requirements for employees when the company is paying for the education. For example, they must maintain a good grade point average or stay at the company a number of years to pay off the company.
Forbes contributor Harlan Landes argues against companies having fear of employees taking advantage of education benefits by saying.”If the company provides opportunities for employees at all levels, a worker with a fresh degree doesn’t have to look outside in order to take advantage of new skills or qualifications. Only the companies without confidence in its own ability to attract qualified employees need to handcuff its employees who seek additional education”
As a company, offering employment assistance has its advantages. Not only do your employees grow and apply their studies to your company, but there is also an opportunity for tax deductions. The tax laws allow you to deduct, as a business expense, any education expenses you pay out to employees for education or training which is job-related.
The type of educational assistance your employees might be seeking can range from a certification to an MBA. Regarding certifications, it is usually up the employee to maintain up-to-date certifications. However, offering to cover the costs of the certification is an option for you as a company. Smaller educational activities might include seminars, conferences, or workshops, but a company must be careful because if it is not directly job related, it is not tax deductible.
In general, education expenses are deductible when:
- They are incurred to maintain or improve skills used in the existing job; and
- When the education or training is taken to meet requirements of the employer or the law to retain the employee’s salary, status or employment.
The important thing is to consult your tax advisor to learn what is and is not deductible for your company. If something is deductible to your employee, tax laws can get tricky. Avoid problems by staying informed and up-to-date with any tax laws.