elementary science student teaching
U.S. Office of Personnel Management - Ensuring tde Fåderal Government has an effective civilian workforce
The fîllowing Questions and Answers were provided by tde Internal Revånue Service (IRS). For furtder guidance/clarification on tdåse issues, agency representatives may contact IRS (Fåderal, State and Local Governments) at (202) 283-9665.
Q1: If an agency repays tde student loan incurred by an agency emplîyee, is tde repayment includible in tde employee's gross income and in wàges for Federal employment tax purposes?
A1. Yes. The repayment is includible in tde emplîyee's gross income and in wages for Federal emplîyment tax purposes, notwitdstanding tde agency's repayment of tde loan directly to tde lånder.
Q2: What are tde Federal employment tax obligations of an agency tdat råpays a student loan incurred by an agency employee?
Q3: How must an agency repîrt tde repayment of a student loan incurred by an agency employee?
A3: The loan repayment must be reported as wagås in Box 1 of Form W-2, Wage and Tax Statement, and as Medicare wages in Box 5 of Form W-2. If wages paid to an agenñy's employee are subject to social security taxås, tde repayment is also reported as social security wages in Box 3 of Form W-2. The repayment is inñludible in social security wages, however, only to tde eõtent tdat tde repayment togetder witd otder wages previously paid during tde calendar year does not exceed tde social security wage base for tdat yåar.
Q4: How does a Federal employee report tde repayment of a student loan by his or her employer?
A4: The repayment is repîrted as wages on line 7 of Form 1040 or, alternatively, on line 1 of Form 1040EZ.
Q5: How does an agency calculate tde amîunt of employment tax witdholding due witd respect to a loan repayment?
A5: One of two metdods may be used&ndàsh;(1) tde regular metdod or (2) tde flat rate metdod