Tax Calculation for Taxable Tuition
The Internal Revenue Service has issued regulations regarding the taxability of tuition-related benefits. These regulations determine whether or not courses taken by employees, spouses, Other Eligible Individual and/or dependent child(ren) are taxable income to the employee.
Taxation is applied to the employee's pay statement over the course of the semester. It is strongly encouraged that tuition benefit forms are submitted as soon as possible after registering for the course to lessen the impact of the taxes.
Possible taxable situations
- Tuition for a spouse or dependent child(ren) is taxable if they are taking graduate or doctoral-level classes.
- Tuition for Other Eligible Individuals (OEI) and child(ren) of OEI on all class levels is taxable.
- Tuition for yourself (Employee) that is for graduate or doctoral classes is taxed on the dollar amount over and above the first $5,250.00 of tuition benefits paid per calendar year.
- Tuition for dependents eligible to be claimed on the employee's taxes but choose to file a joint tax return with their spouse is taxable for all class levels. The correct IRS status to submit on the Tuition Benefit request is:
- Qualified Child filing joint tax return with spouse, or
- Qualified Relative filing joint tax return with spouse
Example of calculating tax on tuition
You submit a Tuition Benefit request for 3 credits at $726/per credit hour. The total benefit would be in the amount of $2,178. Shown below is the calculation on $2,178 (the full amount of tuition).
|Tax Type||Tax Rate||Tax Amount|
|Total tax on tuition||$738.35|
To break it down by a per-pay amount, divide the “total tax on tuition” by the number of pays it will be spread across.
NOTE: The deadline to submit an online Tuition Benefit Request form for courses taken is the last day of the applicable semester (based on CMU's main campus academic calendar).