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Are payments excludable from our nurses’ incomes?

by on
in Office Management,Payroll Management

Question: We run a rural health clinic. Under one state program, nurses qualify for tuition reimbursement. Another program picks up a portion of their salary for a certain number of years. There are very few restrictions on those payments, however. For example, nurses can qualify for the tuition reimbursement even if their student loans weren’t for education in nursing. We know that payments made under certain programs that encourage health care professionals to work in underserved areas are tax-free. Do these payments fall into that category?

Answer: Probably not. Those payments are more like regular employment incentives, not tax-free loan forgiveness payments. Key difference: Any nurse may qualify for the tuition reimbursement, not just nurses who owe student debt related to medical training.

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