Minimum Educational Requirements

• The Fringe Benefit Guide states that courses used to enhance or maintain skills rather than prepare you for a new job are tax-exempt. However, if the course is taken so that you can meet the minimum educational requirements for a job, the expense of the course is not exempt and is added to your income. For example, a new teacher required by Missouri law to have a certain number of education course credits and must take the courses to comply with the job's requirements will find the expense added to his income.
  
  

Continuing Education

• Missouri and federal tax codes allow for tax-exempt education expenses if you must continue education as part of your job. For example, financial professionals are required to take continuing education credits to maintain their licensing. In addition, if the education is used to maintain or improve your job-related skills---but does not qualify you for a new job---it's tax-exempt. Education may be undergraduate or graduate level coursework.
  
  

Qualified Educational Assistance

• Tuition expenses paid on behalf of an employee may be excluded from wages if certain conditions are met. To qualify, the employee must have a written plan with a dollar limit of $5,250 a year. The plan can't discriminate in favor of employees making more than $110,000 a year, according to the IRS. Current, laid-off, retired and disabled employees qualify, but spouses or dependents of employees don't. In addition to tuition, expenses such as books, supplies and necessary equipment are covered as well. If tools or supplies can be kept after the class is completed, they don't qualify; neither do meals, lodging or transportation.
  
  

When the Employer is an Educational Institution

• Employees who work for an educational institution don't have to pay taxes when they enroll in classes offered by their employer. Spouses, retired employees, widows and dependent children may also keep tuition and expenses tax-exempt. Scholarship awards may or may not be taxable, depending on who the grantor is. Payments for past, present or future services that benefit the grantor are taxable. Missouri and the federal government define an educational institution as an organization that exists for an educational purpose, maintains a regular faculty and curriculum, and has enrolled students on-site.