All Employee Tuition Benefits above $5,250 received per calendar year must be taxed as non-cash compensation and added to an employee's taxable wages. Taxes are assessed in the year in which the funds are received. Additional information can be found on the IRS website.
Employee reduced tuition benefits
Employee reduced tuition benefits are taxed evenly across all pay periods in a given quarter – three paychecks for monthly employees; five for bi-weekly employees – to distribute the taxation over time and decrease the impact on a single paycheck.
For example, if your tuition benefits for the spring quarter are $4,000 and you receive an additional $2,000 in assistance in the summer quarter, the $750 ($6,000-$5,250 = $750) would be taxed evenly between your July-September paychecks.
Estimate your additional taxes
There are two calculators to help estimate your additional taxes and your Net (take-home) pay when using the employee reduced tuition benefits.
Employee portable, certificate and satellite tuition benefits
Because these benefits are reimbursed in a single lump sum, the full tax due is withheld from the paycheck on which the reimbursement is paid.
Dependent reduced and portable tuition benefits
Dependent tuition benefits are non-taxable benefits. No taxes will be withheld for these benefits.