Office of the Vice President for Global Communications

Thursday, November 11, 2010

Tuition Support Payments for graduate-level courses will become taxable Jan. 1

The university’s SPG 201.69 (Tuition Support Program) provides tuition support for staff members who are taking undergraduate and graduate courses.

Currently, tuition support for undergraduate courses is tax-exempt. Tuition support for graduate-level courses is tax exempt for amounts up to $5,250 (annually) and taxable for support that exceeds $5,250.

Effective Jan. 1, all tuition support payments for graduate-level courses will become taxable compensation because the Internal Revenue Code (IRC) Section 127 is expiring on
Dec. 31. This issue does not apply to GSIs or GSRAs or any scholarship payments or tuition waivers. It will only impact staff who receive tuition support as a reimbursement in accordance with SPG 201.69.

Unless Congress extends Section 127, all tuition support for graduate-level courses (advances, refunds or waivers) will be taxable for payments or imputed income processed on and after Jan. 1. The Payroll Office will not attempt to determine when the course was taken — simply when the payment or imputed income is processed. Payments on and after Jan. 1 will become taxable for federal, state and FICA taxes. 

Undergraduate tuition support will continue to be tax-exempt based on Section 117(d) of the IRC. Also, there will be no impact on tuition waivers that are provided to GEO members who also are covered under IRC Section 117.

Any questions may be addressed to the HR/Payroll Service Center at 734-615-2000.