Human Resources

Tuition Waiver Taxation

The university offers tuition waivers to various individuals. Information regarding the use of tuition waivers can be found at: http://www.siue.edu/humanresources/benefits/tuition_waiver.shtml for employees, retirees, and dependents, and at http://www.siue.edu/graduate for graduate assistants. These waivers have different tax treatments under the Internal Revenue Code.

Section 117(d) of the Internal Revenue Code

SIUE uses Internal Revenue Code (IRC) Sec. 117(d) to exempt all undergraduate tuition waivers to employees or those individuals who are treated as employees under the rules of IRC Sec. 132(h). Employees are Civil Service employees, Faculty, and Administrative/Professional staff in active pay status. Individuals treated as employees for purposes of section 132(h) are retired and disabled employees, surviving spouse of an employee, and spouses and dependent children of the employee. According to the rules of section 132(h), any undergraduate tuition waiver given to persons on layoff or termination status are taxable, as they are not employees or treated as employees.

IRC Sec. 117(d) also covers graduate tuition waivers for graduate students engaged in teaching or research activities. Graduate students working in Teaching Assistant and/or Research Assistant positions are not taxed on their tuition waivers.

Section 127 of the Internal Revenue Code

SIUE has an Educational Assistance Plan found at https://www.siue.edu/human-resources/pdf/SIUE_Educ_Assistance_Plan.pdf. Graduate courses are part of the Educational Assistance Plan and must meet the requirements of IRC Sec. 127 in order for the graduate level tuition waiver to be excluded. IRC Sec. 127 covers only employees and only the first $5,250 is tax exempt. Employees are Civil Service employees, Faculty, and Administrative/Professional staff in active pay status. According to Treas. Reg §1.127-2(h)(1), the term "employee" also includes a retired, disabled, or laid-off employee and a present employee who is on leave in the Armed Forces of the United States. Therefore, any graduate assistance provided to dependents of deceased employees (surviving spouses and dependent children), and in-state rates for out-of-state dependent of SIUE employee should be taxable.