tuition assistance - count it as compensation?

First time I've seen this...

Client sends me a Quickbook payroll detail with a line for Tuition Assistance in the "Employer Taxes and Contributions" section (the section that shows things the ER pays, like the company part of medicare, the company part of SS, 401k match, etc.

I asked about it, and the client said that this was the up to $5,250 that the ee can get without being taxed.  This was new to me, so I did some research and found this (I didn't keep where I found it, though; I just copy/pasted it to a Word doc):
 

Quote

An employer can reimburse employees up to $5,250 annually without this amount being taxed.  While more can be offered in a tuition reimbursement program, any amount above the allotted amount will be seen as a fringe benefit and will be subject to taxes.  Employers can also deduct the maximum of $5,250 per employee from their taxes each year, making tuition reimbursement cost-effective for all parties involved.  For tuition reimbursement to stay tax free, the money can only go towards tuition, fees, and school supplies, such as books.  Additionally, graduate courses are tax-exempt only if the employee is in a research of work-study position.

Anyone familiar with this kind of thing?

"Reimbursement" is what I'm focusing on.  The client has three employees getting this, all over the $5,250 threshold.  Let's say one of them is at $7,000.  Do I need to count $7,000 or $1,750 somewhere?  I'm thinking "no", and I'd like to assume (ha! I will try and confirm) that no part of this is in the Gross Pay.

If it matters, the plan uses W-2 comp and also excludes "taxable employee benefits" from comp.

Any guidance is appreciated, thanks.

If a measure of compensation relates to Form W-2 wages or § 3401 wages, whether with or without adjustments:

For 2023, the educational assistance excluded from an employee’s income (at least for Federal income tax) under a § 127(b) educational assistance program does not count in Form W-2’s box 1 wages. But if some portion was not excludable (for example, because the employer provided more than § 127(a)(2)’s $5,250 limit, the excess is included in income and in box 1 wages.

Internal Revenue Code § 127 https://irc.bloombergtax.com/public/uscode/doc/irc/section_127.

Form W-2 instructions at page 10, right column, last paragraph, and page 18, right column, item 11 https://www.irs.gov/pub/irs-pdf/iw2w3.pdf.

Using your example, ($7,000 - $5,250), $1,750 counts in box 1 wages.

In some circumstances, an amount beyond $5,250 might be excluded from the employee’s income and wages to the extent of a working-condition fringe benefit or a required activity that is ordinary and necessary in the employer’s business.

Consider testing the detail file against the W-2 file.

After finding or confirming the “W-2” starting point, one would discern the meaning of the plan’s provision to exclude from compensation “taxable employee benefits” and apply that provision.

Agree with Peter.

If your plan definition of comp is W2 then the excess goes into that (presuming payroll done correctly) and if the definition further excludes fringe benefits et al, it comes back out.