[PW] Re: Question about Qualified Tuition Reduction

[Sarah C.]

"In practicaly terms, again, it appears that tuition reduction for ALL EMPLOYEES of a college or university are NOT taxable PROVIDED IT IS FOR UNDERGRADUATE coursework.  However, at the GRADUATE level, tuition reduction IS taxable for employees who are not teaching or research assistants."

I second this.  I work at a university, my undergraduate there was tax free since they paid for up to 8.0 credits.  Now that I am in my graduate phase, I will have to pay taxes on the money that I am receiving as a reimbursement (or that would have been a fee remission at my school).  This goes for our employees, and the dependents of employees who take graduate courses.

-Sarah

----- Original Message ----
From: "Franco, Adrienne" <AFranco at iona.edu>
To: list at project-wombat.org; list at project-wombat.org
Sent: Friday, September 8, 2006 5:28:48 PM
Subject: [PW] Re: Question about Qualified Tuition Reduction

Apologies for inadvertently repeating same quote you used from Pub. 170.  Paragraph 2 of my reply does give my interpretation.
 
Here's some information from Internal Revenue Code which may help:
TITLE 26 > Subtitle A > CHAPTER 1 > Subchapter B > PART III > § 117 
§ 117. Qualified scholarships
http://www4.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000117----000-.html 

"(2)  Qualified tuition reduction
For purposes of this subsection, the term "qualified tuition reduction" means the amount of any reduction in tuition provided to an employee of an organization described in section 170 (b)(1)(A)(ii) for the education (below the graduate level) at such organization (or another organization described in section 170(b)(1)(A)(ii)) of-
(A) such employee, or
(B) any person treated as an employee (or whose use is treated as an employee use) under the rules of section 132 (h).
.....................................

(5) Special rules for teaching and research assistants
In the case of the education of an individual who is a graduate student at an educational organization described in section 170 (b)(1)(A)(ii) and who is engaged in teaching or research activities for such organization, paragraph (2) shall be applied as if it did not contain the phrase "(below the graduate level)"."
 
NOTE that "qualified tuition reduction" applies to college employees at the UNDERGRADUATE level.
NOTE that "teaching and research assistants", this also applies to GRADUATE tuition reduction.
 
In practicaly terms, again, it appears that tuition reduction for ALL EMPLOYEES of a college or university are NOT taxable PROVIDED IT IS FOR UNDERGRADUATE coursework.  However, at the GRADUATE level, tuition reduction IS taxable for employees who are not teaching or research assistants.

Adrienne Franco / Iona College

________________________________

From: project-wombat-bounces at lists.project-wombat.org on behalf of Franco, Adrienne
Sent: Fri 9/8/2006 5:01 PM
To: list at project-wombat.org
Subject: [PW] Re: Question about Qualified Tuition Reduction



This definition which is also from Pub. 170 may be helpful.  Copied and pasted from:
http://www.irs.gov/publications/p970/ch01.html#d0e1232

"Graduate education.    Tuition reductions for graduate education are considered "qualified" and are tax free if they are provided by an eligible educational institution to a graduate student who performs teaching or research activities for that institution. All other tuition reductions for graduate education are taxable."

I think what this means is that if an employee of a college or university who is not a graduate assistant gets free or reduced tuition, the value of that tuition would be taxable; conversely, I believe this means that someone who is a graduate assistant (not a regular employee per se of the college or university), would not have their tuition value taxed.

Adrienne Franco / Iona College Libraries


________________________________

From: project-wombat-bounces at lists.project-wombat.org on behalf of Susan White
Sent: Fri 9/8/2006 4:34 PM
To: list at project-wombat.org
Subject: [PW] Question about Qualified Tuition Reduction
        Does anyone out there know about "Qualified Tuition Reductions"
for College employees seeking graduate degrees at their institution? I
am trying to understand what the following means and could use some
help, as a colleage was asking about how this impacts them...

        In the IRS Tax Benefits for Education (970, Cat. No. 25221V) -
There is a statement that reads "Graduate education. Tuition reductions
for graduate education are considered "qualified" and are tax free if
they are provided by an eligible educational institution to a graduate
student *who performs teaching or research activ ities for that
institution.* All other tuition reductions for graduate education are
taxable."
Much Thanks,

Sue White
Academic Librarian
University of Advancing Technology    
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Project Wombat
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