Can my business pay my child’s college tuition?

Question: Can my business pay my child’s college tuition?

Answer: As a business owner and parent, your child’s college tuition cannot be considered a business expense. However, you could hire and pay wages to your child. Requirements for this include your child must perform a legitimate business function and you must pay the child market rate for similar activities. If this is the child’s only income, as a business owner, you could pay the child up to $12,950 per year. Qualifying wages paid to your child are eligible business expenses, reducing your business taxable income, and the child’s wages are tax-free. Businesses operating a tuition reimbursement plan have additional requirements, which vary based on how the benefits administrator created the plan. Generally, employees must enroll in a course and provide the employer with a transcript documenting a passing grade for the course.

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