Taxation and the Tuition Waiver

Per the Internal Revenue Code Section 127, tuition waiver benefits for graduate students are subject to federal, state and FICA taxation. As such, the value of the tuition waiver benefit for graduate spouses/partners and children will be reported as taxable income on employees' paychecks. Tuition waiver benefits for graduate employees are also taxable with the following two exceptions:

1. Tuition benefits paid toward job-related education is non-taxable.
2. Effective January 1, 2002, Congress has extended a $5,250-per-calendar-year tax exclusion for employee's graduate tuition. This means is that employees using the DU tuition waiver for their own non-job-related graduate education will not be assessed taxes on this benefit until the yearly exclusion is exceeded.

Tax withholdings will be calculated based on several factors including W-4 elections and regular annual salary. The university cannot provide information specific to employees' tax withholdings. A tax advisor for should be consulted for further information about taxation.

Determination of Job-Relatedness

Determination of job-relatedness is at the sole discretion of the employee's supervisor. To meet the job-relatedness criterion, a course must satisfy at least one of the following requirements:

1. Be required by DU or by law as a condition of keeping your present salary, status, or job, and serve a business purpose of the University
2. Maintain or improve the skills needed for your present work or position

Even if your education meets one or both of the requirements above, it does not qualify if it is:

1. Needed to meet the minimum educational requirements of your present trade or business
2. Required as a part of a program of study that can qualify you for a new trade or business, even if you have no plans to enter that trade or business

Taxation Schedule

The taxation schedule will be adjusted for employees paid less than 12 months/year.