Tuition Benefit Taxability

Generally, Tuition Waiver for undergraduate courses is tax-free. However, there are situations when Tuition Waiver for an undergraduate course would be taxable, including the following:

• An undergraduate Tuition Waiver for your child who is not your tax dependent would be taxable to you.


• An undergraduate Tuition Waiver for your domestic partner would be taxable to you.

Generally, all Tuition Waivers for graduate courses that you and your eligible family members take are taxable, except as described in the Taxability section of the Education Benefits SPD.

There are two ways that an employee’s taxable Tuition Waiver can be considered tax-free (these rules do not apply for family members):

1. If the course is considered job-related, the Tuition Waiver can be provided tax-free. The IRS defines a job-related course as one needed to maintain or improve an employee's current RIT job skills. A course is not job-related if it serves to meet the minimum requirements of the RIT job or is part of a program of study qualifying an individual for a new profession.


2. Under federal law, regular and adjunct employees can receive $5,250 per calendar year in graduate educational assistance on a tax-free basis. RIT provides this tax-free benefit under RIT’s Educational Assistance Program.

If the Tuition Waiver is taxable, you will receive a bill from the Payroll Office for the tax amount due. The tax amount includes federal, FICA, and state taxes, and is approximately 40% (can vary based on changes in the tax tables). You must pay the amount billed promptly upon receipt. If you do not pay by the due date, neither you nor your eligible family members will be able to register for future terms.

Tuition Assistance reimbursements are not subject to tax.

Generally, Tuition Exchange (TE) Scholarships are not taxable. However, there are certain cases according to the Internal Revenue Code when the TE Scholarship will be treated as taxable income to you, including the following:

1. Your child is not reported on your or your ex-spouse’s (child’s other parent) tax return.


2. Your spouse’s child (your stepchild) is not reported on your spouse’s tax return; or


3. Your domestic partner’s child is not reported on your tax return.

There may be other circumstances in which a TE Scholarship is taxable; you should check with your own tax advisor for your personal situation. If the TE Scholarship is taxable, the RIT Payroll Office will send you an invoice for the taxes you owe and you must pay RIT; your Form W-2 will be adjusted to include additional income for the TE Scholarship and taxes paid.

You will be billed two times during the academic year, with each bill for one-half of the full annual amount.

Generally, Tuition Scholarships are not taxable. However, there are certain cases according to the Internal Revenue Code when the Tuition Scholarship will be treated as taxable income to you. The scholarship would be taxable if the child:

• is your child and is not reported on your or your ex-spouse’s (child’s other parent) tax return;


• is your spouse’s child (your step-child) and is not reported on your spouse’s tax return; or


• is your domestic partner’s child who is not reported on your tax return.

If it is a taxable reimbursement, the payment will be taxable, subject to tax withholding, and will be part of your taxable earnings reported on Form W-2.

For more detailed information, please visit the RIT Human Resources’ Education Benefits page: https://www.rit.edu/humanresources/education-benefits

If you have questions about this information or require assistance, please email payrolltax@rit.edu.