Job-Related Graduate Education Certification Policy
The tuition waiver benefit provided by The New School (TNS) for undergraduate course(s) is not taxable as outlined in the Tuition Waiver guidelines. The tuition benefit provided for graduate-level courses are tax-exempt up to $5,250 in a calendar year (January - December), per the IRS regulations. Any graduate-level education benefit provided to you above $5,250 is considered taxable income, and subject to payroll tax withholding.
The Job-Related Graduate Education Certification Policy, also known as "Tuition Fringe Benefit," outlined below additionally allows employees using tuition benefits the opportunity to certify that their graduate-level education at TNS is job-related per IRS tax regulation. That regulation allows the value of job-related graduate programs and courses to be eligible for federal tax exemption.
This policy addresses:
- Graduate-level Courses taken as part of a non-degree program
- Graduate-level Degree Program or Post-Baccalaureate Certificate Program courses
This policy does not address:
- Undergraduate degrees (because the value of Tuition Waiver for employees’ undergraduate degrees is not taxable)
- Doctoral programs (per IRS regulations, the value of employer-paid doctoral programs is never exempt from taxation).
- Courses taken outside TNS since these are not covered by Tuition Waiver.
- Courses taken employee family members
Employees must meet below criteria:
- Current employee who is eligible for Tuition Waiver benefits,
- Enrolled in a graduate-level degree program, post-baccalaureate/graduate certificate program, or non-degree course(s), and
- Able to certify that your graduate-level education is job-related as described in the policy below.
In general, the Internal Revenue Service (IRS) considers the value of graduate-level Tuition Waiver benefits exceeding $5,250 in a calendar year to be imputed income and taxable. However, per IRS Department of Treasury Regulation Section 1.162.5., graduate-level education which meets the following IRS criteria can be certified as job-related, and thus be exempt from Federal taxes.
- The education maintains or improves skills required in your current job.
- The education is required by your employer or the law to keep your present salary, status, or job. The required education must serve a bona fide business purpose of your employer.
- The coursework is not needed to meet the minimum educational requirements of your current job.
- The coursework is not part of a program or study that will qualify you for a new trade or business, nor is it a Ph.D. or other doctoral program.
NOTE: As long as the job-related course or program “improves skills needed for the current job based on the skills identified in the job description,” it does not qualify you for a new trade or business.
To comply with the IRS job-related criteria, either (a) or (b) must be true, and both (c) and (d) must be true. If your graduate-level education is certified as job-related, TNS will not withhold taxes on the tuition it pays toward your Tuition Waiver benefits.
IMPORTANT: Graduate-level courses taken as part of a non-degree graduate program are evaluated per individual course. A graduate-level degree program or post-baccalaureate certificate program is evaluated as an entire program of study.
The employee applying for the graduate education benefit and their supervisor should follow the steps below to request the tax exemption.
- Ensure you meet eligibility requirements established in Section III (above) by the first day of classes per the Academic Calendar.
- Complete the Job Related Graduate Education Certification: Employee Form ("Employee Form") for:
- Graduate-level courses taken as part of a non-degree program (requires recertification), or
- Graduate-level degree program or post-baccalaureate certificate program.
- Submit the Employee Form and backup documentation to your Supervisor by the first day of classes.
- NOTE: You may be subject to taxation of your tuition waiver benefits if your form is submitted after the Add/Drop Period.
- You will be notified by your supervisor if your program or courses have been certified as job-related.
- You must re-certify with a new copy of the Employee Form in the below situations. There are no exceptions to this rule.
- If you change jobs and/or your degree program for any reason.
- If you are enrolled in graduate-level courses taken as part of a non-degree program.
Recertification is not required if you are enrolled in a graduate degree program or post-baccalaureate certificate program that is registered with the NYSED.
- Ensure your staff member is eligible to receive the Tuition Waiver Benefit as described above.
- Review you staff member's signed and completed Employee Form.
- Complete and sign the Job Related Graduate Education Certification: Supervisor Form ("Supervisor Form").
- Submit both Employee Form and Supervisor Form along with backup documentation to Human Resources.
- HR will return finalized Supervisor Form. Send copy of determination to your employee.
- Review the Employee Form, Supervisor Form, and backup documentation.
- Based on University policy and IRS Department of Treasury Regulation Section 1.162.5 make a determination of graduation education tax benefit. Indicate determination on the Supervisor Form.
- Send Supervisor Supervisor Form with determination notated.
Forms and Addenda
- Job Related Graduate Education Certification: Employee Form
- Job Related Graduate Education Certification: Supervisor Form
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