Legal Considerations/Taxation

This page contains information specific to:

          Parameters for taxation

          Determination of Job-Relatedness

          Taxation schedule

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 spouse/partners and children will be reported as taxable income on employees’ paychecks. Tuition waiver benefits for graduate employees are also taxable with two exceptions:

1. Tuition benefits paid toward job-related education is non-taxable.
2. Effective January 1, 2002, Congress has extended a $5,250.00 per year (January through December) 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 exhausted.

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

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

1. Be required by DU or by the 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 is NOT qualifying 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 will be adjusted for employees paid less than 12 months/year.

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