|Subchapter 4537 - Repayment of Student Loans
Section C - Tax Information
|Is This Part of Gross Income for Tax Purposes?||
Yes, the incentive is included in the employee's gross income and in wages for federal employment tax purposes.
Your employee should contact the IRS to determine how to report this benefit and for any other tax related questions or obligations.
NFC will report payment of this incentive to the IRS.
Note: See http://archive.opm.gov/flsa/oca/pay/StudentLoan/HTML/QandAsTax.asp for additional information on tax liability.
Tax withholdings are deducted or applied at the time the loan repayment is made. Tax withholdings may not be spread out over time.
The deduction for employment tax withholding reduces the maximum loan repayment.
Example: If you grant a benefit of $6,000 and your employee's tax deductions are $2,000, then the actual loan payment to the loan institution is $4,000. However, the fully approved benefit amount of $6,000 counts toward the maximum benefit limitations.
|Easing Tax Liability||
In an effort to ease the tax liability to employees receiving this benefit, you may have:
Note: Remember to advise HRO of the above method to be used.
Note: The following web sites contain the latest information from the IRS on tax liabilities and payment procedures:
SPO: See also NFC Bulletin, Title I, 01 - 15, dated September 21, 2001.