Employee Tuition Waiver Benefit
Faculty and staff may be eligible for tuition waivers for credit courses, in accordance with Board of Regents Policy, Chapter 6, Section 6-13. Employees must be employed on a half time basis or more to be eligible for tuition waivers at any campus for a maximum of six credits per semester. Spouses and domestic partners of members of bargaining unit 07, 08, 87 and 88 may also be eligible for tuition waivers.
The value of this tuition waiver may be taxable to the employee. Tuition waivers are not taxable for employee and spouse for education leading to a baccalaureate degree.
» Taxability of Tuition Waivers to Employee's Spouse
Tuition waivers are not taxable for employee's spouse for education leading to a baccalaureate degree.
» Taxability of Tuition Waivers to Employee's Domestic Partner
The value of tuition waivers afforded to domestic partner for education at any level is taxable to the University employee.
» Withholding of Taxes for Employee's Spouse & Domestic Partner
Tuition Waivers
The value of the tuition waiver, if applicable, will be included in the employee's gross income and reported as wages or other compensation on the employee's W2 and is subject to employment taxes. Taxable amounts will be transmitted through the State Payroll System. These taxable amounts will increase the employee's Federal, State and FICA taxable income and will generate additional withholding assessments against gross payroll wages. These payments are not payroll payments, but serve to increase taxable income and are defined as "Wages-in-Kind." The Employee's Earnings Statements and the annual W-2 Statements will therefore reflect taxable income and withholding amounts related to both payroll wages and wages-in-kind.
For the remainder of calendar year 2008 tax withholding follow
the schedule below:
Spring 2008 - withholding will occur on 9/15 for faculty or 9/20 for non-faculty.
Summer 2008 - withholding will occur on 10/15 for faculty or 10/20 for non-faculty
Fall 2008 - withholding will occur on 11/15 for faculty or 11/20 for non-faculty.
Beginning in calendar year 2009, tax withholding for employee tuition waiver benefits will be processed on the pay dates below:
Spring 2009 - withholding will occur on 5/15 for faculty or 5/20 for non-faculty.
Summer 2009 - withholding will occur on 9/15 for faculty or 9/20 for non-faculty.
Fall 2009 - withholding will occur on 11/15 for faculty or 11/20 for non-faculty.
It is not the University's intent to maximize the tax disadvantage to our employees. Each employee's tax situation is different and we are unable to tailor withholding of taxes to individual needs. In general, inclusion of this tuition waiver benefit as one lump sum to wages is in compliance with rules set forth by the Internal Revenue Service. However, should the lump sum be large enough to cause a substantial tax withholding in decreasing the employee's pay check, the University may consider allocating this lump sum into different pay periods. Hence, effective with the tax withholding for Spring 2008 tuition waivers, if an employee's taxable benefit amount is greater than the employee's regular gross semi-monthly payroll amount, the taxable benefit amount will be split between 2 pay periods, the designated pay date shown above and the next following pay date.
Example: Spring 2008 tuition waiver amount is for $3,000. Employee's gross pay for 9/15 pay date is $2,500. Gross income and taxes withheld will be adjusted to include $1,500 ($3,000/2) value of the tuition waiver for the 9/15 and 9/30 pay dates.
If the value of the tuition waiver is $2,000, the employee's gross income will be adjusted and taxes withheld for only the 9/15 pay date.
Employees should consult with their tax advisor with any further questions.