Can an S-corp offer an educational assistance program for it's one employee who is also the sole owner?

Yes, an S-corporation can offer an educational assistance program, even if the sole employee is also the owner. However, there are specific tax implications and rules that must be followed. Under IRS Section 127, an employer can provide up to $5,250 per year in tax-free educational assistance to employees for undergraduate or graduate-level courses. This can include tuition, fees, books, supplies, and equipment. However, the exclusion from income does not apply to supplies that the employee can keep after the course is over (like a computer), nor does it apply to courses related to sports, games, or hobbies unless they are required as part of a degree program or are related to improving job skills. For the sole owner-employee of an S-corporation, the situation is a bit more complex. The IRS may scrutinize such benefits to ensure they are not disguised forms of dividend payments, which should be taxed differently. The educational assistance must be provided under a formal written plan and should not discriminate in favor of highly compensated employees, which can be challenging in a single-employee scenario. It's important to note that if the owner-employee owns more than 2% of the S-corp's stock, the IRS treats them as a partner for fringe benefit purposes, and the rules for educational assistance programs may differ. The benefits provided to a more-than-2% shareholder-employee may not be tax-free and could be taxable as wages. Given the complexity of tax laws and the

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