The CARES Act included a provision allowing employers to repay up to $5,250 of their employee?s student loans as a tax-free benefit. That?s a great benefit for any staff member burdened with student loan debt. Practice owners benefit too since they can write off the full amount paid without owing any payroll taxes on the loan repayments made.
Only loan repayments made prior to December 31, 2020 qualify for this valuable benefit, so you need to act quickly. Another requirement is for the student loan to be in the employee?s name, which means that loans taken by their parents don?t count.
Please note that your practice will also need to have a written document drafted for this ?Section 127 Plan? to take advantage of this tax-advantaged employee benefit. Please email our payroll team firstname.lastname@example.org?so we can refer you to an H.R. Specialist to prepare this document for you if you are interested in providing this valuable and tax-advantaged employee benefit.