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Reminders for Employees About Graduate-level Education Benefits and Taxes

Posted 05/02/2014
Submitted by Jen Conley
Category: Campus Announcements

Current regulations on employer-provided educational assistance require that the value of graduate-level education benefits (taken by the employee) in excess of $5,250 within a calendar year be recorded as income to the employee, making them subject to tax withholding. 

HRD would like to remind faculty and staff that the IRS allows for exception to this rule when the graduate course taken is determined to be work-related. University employees taking graduate courses who feel their course (1) is work-related; (2) benefits their department; and (3) benefits the University may apply for exemption of taxes associated with the course. 

To apply for the tax exemption, you must complete an Application for Tax Exemption of Graduate-Level Course form. Completed forms must be approved by your supervisor and forwarded to HRD no later than two weeks after the course begins. Once a decision is reached, you will be notified. The form can be downloaded from the HRD forms page at

In addition, employees who receive Tuition Remission for their spouse, same-sex partner and/or dependent child(ren) for graduate-level courses are subject to tax implications (imputed income). Federal law requires the University to withhold taxes on graduate-level tuition remission benefits. The withholding will vary depending on the number of credits taken per semester and the employee’s tax bracket. Deductions will be taken directly from the employee’s paychecks during the semester in which the course(s) is taken.

If you have any questions regarding imputed tax, please contact Payroll at 860.768.4579.