Tuition Waiver - Tax Implications
Eligible Employees should note that the amount of the tuition waiver, if applicable, will be included in the Employee’s taxable income, which is subject to all payroll taxes, and reportable on the Form W-2 for the calendar year in which the course begins. These taxable amounts, which are defined as Wages-in-Kind, will increase the Employee’s Federal, State, Local and FICA taxable income and will generate additional withholding assessments against the Employee’s payroll wages. The Employee’s pay stubs and the annual Form W-2 will reflect taxable income and withholding amounts related to both payroll wages and wages-in-kind.
Please refer to the following matrix which identifies which type of courses would be subject to taxation:
Student | Undergraduate Program | Graduate Program | Adult/Continuing Education |
No tax liability | Amount of tuition and mandatory fees in excess of $5,250 in a calendar year is added as taxable income to the Employee unless approved for job-related tuition-fringe benefits | No tax liability | |
Spouse | No tax liability | Total amount of tuition and mandatory fees is added as taxable income to the Employee | No tax liability |
Qualified Domestic Partner | Total amount of tuition and mandatory fees is added as taxable income to the Employee | Total amount of tuition and mandatory fees is added as taxable income to the Employee | Total amount of tuition and mandatory fees is added as taxable income to the Employee |
Child (dependent) | No tax liability if child is claimed as dependent for federal tax purposes, either as a qualifying child or qualifying relative as outlined in IRS publication 501* | Total amount of tuition and mandatory fees is added as taxable income to the Employee | No tax liability if child is claimed as dependent for federal tax purposes, either as a qualifying child or qualifying relative as outlined in IRS publication 501* |
Child (age 24 or older on the first day of the semester, or not claimed as a dependent on the Employee's tax return) | Total amount of tuition and mandatory fees is added as taxable income to the Employee | Total amount of tuition and mandatory fees is added as taxable income to the Employee | Total amount of tuition and mandatory fees is added as taxable income to the Employee |
Child of Qualified Domestic Partner | Total amount of tuition and mandatory fees is added as taxable income to the Employee | Total amount of tuition and mandatory fees is added as taxable income to the Employee | Total amount of tuition and mandatory fees is added as taxable income to the Employee |
The taxable amount will be proportionally added to each paycheck through the end of the calendar year. No individual tax withholding arrangements are permitted.
*See the Tuition Waiver Request Form for more information about claiming a child as a dependent for federal tax purposes.
Additional Tuition Waiver Information
Return to * Tuition Waiver Overview.
RELATED LINKS
- Job-Related Graduate Education Certification Policy
- Benefits Overview - summary of available university benefits