Final answer:
True, the IRS allows up to $5,250 of educational benefits to be excluded from an employee's taxable income under an employer's educational assistance program.
Step-by-step explanation:
The statement that up to $5,250 of educational benefits can be excluded from an employee's compensation is in fact true. The Internal Revenue Code Section 127 provides an exclusion for educational assistance provided under an employer's educational assistance program. Up to $5,250 of benefits provided to an employee under such a program can be excluded from the employee's income, meaning it is not subject to federal income tax. These educational benefits can cover costs such as tuition, fees, books, supplies, and equipment. However, the benefits do not include payments for meals, lodging, or transportation, nor do they cover tools or supplies (other than textbooks) that the employee can keep after the course is over.