Starting Jan. 1, 2013, most employer-provided education benefits that do not relate to an employee’s current job are taxable in Minnesota. Those benefits generally include the cost of books, equipment, fees, supplies and tuition.
Effective immediately, you should withhold Minnesota income tax on employer-paid educational benefits unless those benefits:
- Maintain or improve skills needed for an employee’s current job. This excludes education necessary to meet the minimum job requirements, or that qualifies an employee for new occupations (see chart), or
- Are provided to employees and their families of educational institutions for classes attended at the educational institution where they are employed (meeting the qualifications of Internal Revenue Code Section 117 (d)).
Where do I put this benefit on the W-2?
You should include the value of the benefits you provided in Box 16 of the Form W-2 as Minnesota wages. This may make wages reported in Box 16 greater than federal wages reported in Box 1.