Graduate Tuition Remission
The University manages its tuition remission plan in accordance with Internal Revenue Service (IRS) regulations.
Graduate-level tuition remission is subject to income tax withholding. Employees enrolled in graduate courses will be exempt from income tax withholding for the first $5,250 of the graduate tuition remission benefit per calendar year – this exemption does not apply to dependents and/or spouses. The value of the tuition scholarship applied to Student Accounts in excess of $5,250 (or in full in the case of dependents/spouses) is taxable within the current calendar year, and is accounted for as a taxable benefit to employees. Taxable graduate remission is added to employee’s payroll wages during the semester the scholarship is awarded, or may be spread over a maximum of 22 payroll cycles.
Graduate Tuition Remission Tax Waiver
Eligibility
Graduate Tuition Remission benefits for employees may not be subject to taxation if they meet the requirements of a "working condition fringe benefit" under IRC Section 132(d). To make that exception, all of the following criteria must be met:
- The educational course must be job-related, and either
- maintain or improve job skills, or
- be expressly required by the employer or by law.
- The educational course must NOT:
- be needed to meet the minimum educational requirements of the current job, or
- qualify the employee for a new trade or business.
The working condition fringe determination is reviewed and must be approved by Human Resources, based on the employee’s current position with the University.
Examples
Examples of scenarios in which course(s) would likely be deemed tax exempt:
Example #1
A Director in the University Relations division is taking several marketing courses in pursuit of a graduate degree in Marketing, which is listed as a preferred (but not required) qualification for their current position. These courses would likely be deemed exempt from taxation.
Example #2
A Staff Accountant in the Finance division is taking several courses toward an MBA in Accounting. These courses improve the employee’s skill at performing duties in their current position, and would likely be deemed exempt from taxation.
Example #3
An Adjunct Assistant Professor in the Psychology department is taking graduate level Psychology courses. These courses are directly related to the employee’s current position that improve the adjunct’s skill at performing their responsibilities, so would likely be deemed exempt from taxation.
Examples of scenarios in which course(s) would likely be subject to taxation for any value above $5,250 in a calendar year.
Example #4
A Staff Assistant providing administrative support to a department is enrolled in several graduate level Finance courses. These courses would be considered as qualifying the employee for a new trade or business and would likely be subject to taxation for the value of the remission above $5,250.
Example #5
An Admissions Counselor is taking a graduate Nursing course. This course is unrelated to the employee’s current position and would be considered as qualifying the employee for a new trade or business, so would likely be subject to taxation for the value of the remission above $5,250.
Example #6
A Professor teaching in the Computer Science department is taking a graduate History course. The course is unrelated to the employee’s current position and would likely be subject to taxation for the value of the remission above $5,250.
Procedure
Please note that the process for requesting a tax waiver approval is included in the Graduate Tuition Remission Application process.
Please note that requesting a tax waiver does not guarantee that your tuition remission benefit will not subject to taxation. You may be asked to provide additional information to establish whether the criteria is met. You will be notified via workflow by HR whether your request is approved.
If your Graduate Tuition Remission is not deemed as being exempt from taxation, you may minimize the per pay period tax impact by spreading your projected calendar year tuition remission benefit evenly over the remaining payroll periods in the calendar year.
Helpful Tools!
The tool below is solely for estimation purposes and provides a conservative estimate of the additional taxes that you will owe on your taxable employee graduate tuition remission, using the Supplemental Tax rate, for the year. Please keep in mind, the Payroll department uses an Annualized tax rate to calculate your tax withholdings – which is specific to the withholding status and personal exemptions claimed on your tax forms – so this estimation might be lower/higher than what is actually withheld from your check.
Instructions
Box 1: Enter your total tuition cost. Your total should include the tuition and general institution fees total for the credits you wish to include in your estimate. To calculate your total tuition cost, please reference the undergraduate tuition chart and general institution fees chart (Undergraduate).
Box 1: Enter your total tuition cost. Your total should include the tuition and general institution fees total for the credits you wish to include in your estimate. To calculate your total tuition cost, please reference the graduate tuition chart and general institution fees chart (Graduate).
- Eligibility percentage as a full-time staff/faculty
- Eligibility percentage as a part-time staff
- Eligibility percentage as part-time faculty
You should only include the percentage you’re eligible for.
Box 2: If you are the student, enter your $5,250 exemption. If the student is your spouse/dependent, enter 0.
- Eligibility percentage as a full-time staff/faculty
- Eligibility percentage as a part-time staff
- Eligibility percentage as part-time faculty
You should only include the percentage you’re eligible for.
Box 2: If you are the student, enter your $5,250 exemption. If the student is your spouse/dependent, enter 0.
** This tool is not intended to be used by you or anyone else for the purpose of tax-advice or tax-evasion. Each taxpayer should seek advice from their independent tax adviser, based on the taxpayer's particular circumstances.
*** This tool provides a rough estimate for the taxes being withheld from your Graduate Tuition remission liability for the entire year. In order to calculate the pay period impact, reference our Calendar of Payroll Dates and divide your year estimate by the number of available pay periods.