Impact on Employer-Provided Educational Assistance:
The “Fiscal Cliff Avoidance” Bill (H.R. 8) enacted on January 1 permanently extends the expanded exclusion for employer-provided educational assistance. The exclusion allows employers to exclude up to $5,250 of employees’ wages per year for payment or reimbursement of tuition, fees, books, certain supplies, and equipment for job or non-job related undergraduate and graduate education as part of a “qualified educational assistance program.” This applies even if the education is provided by the employer (employees who receive this benefit can exclude up to $5,250 of those benefits from their taxable income).
Impact on the Farm Bill’s Employment and Training:
The deal also extends the Farm Bill, which authorizes the Supplemental Nutrition Assistance Program Employment & Training (SNAP E&T) program through the end of the fiscal year (formerly the “Food Stamps Employment & Training or FSET program). Funding will be provided at the 2012 level of $79 million. In Washington, SNAP E&T brought in $21 million in new federal funding in FFY 2006-’11 for Seattle Jobs Initiative and 30 other community agencies/colleges around the State.
Impact on Unemployment Resources:
H.R. 8 also extends unemployment insurance (UI) benefits through 2013. Without an extension, 2.2 million families would have lost access to UI benefits on January 1, 2013.
Impact for College Students:
The bill extends the American Opportunity Tax Credit for five years, which offers up to $10,000 in tax credit during the first four years of college.
In addition, it extends the expanded Coverdell Education Savings Accounts, which enable users to invest up to $2,000/child per year in certificates of deposit, stocks, bonds, or mutual funds. These funds then earn tax-free interest and can be used to pay for future education expenses, such as private-school tuition, computers, tutoring, and Internet education.
The expanded student loan interest deduction is also extended through the Fiscal Cliff Avoidance Bill. It can reduce the amount of your taxable income by up to $2,500. The bill passed January 1, 2013 permanently reinstates this deduction, which was standard until 1986 when the Tax Reform Act was passed.