Payroll & Benefits

Tuition and Fees: Waivers and Departmental Payments

Taxability of Certain Assistantship Tuition and Service Fee Waivers

This information applies to all graduate assistants (GAs) and professional graduate assistants (PGAs) who are eligible to hold assistantship appointments accompanied by tuition and service fee waivers.

Current tax law exempts Teaching Assistants (TAs), Research Assistants (RAs), and most Fellows from having to pay taxes on tuition and service fee waivers associated with these appointments.

The University is required to document and track the taxability of tuition and service fee waivers provided to Graduate Assistants (GAs) and Pre-professional Graduate Assistants (PGAs).

In compliance with Internal Revenue Code Section 127, $5,250 per calendar year in tuition and service fee waivers associated with GA and/or PGA appointments is excluded from taxable income. This pertains to all GA and PGA appointments.

Students receiving waivers associated with GA or PGA appointments will receive information from University Payroll and Benefits (UPB) after the add drop period when the waiver amount for the calendar year is greater than $5,250. GAs and PGAs may be exempt if:

  • The value of the GA or PGA waiver does not exceed $5,250 for the calendar year, or

  • The value of the waiver exceeds $5,250 for the calendar year and there is a concurrent TA or RA appointment that is half or more of the total percentage appointment (for example, if you have a combined appointment of 30% that includes a 15% RA appointment, then you should not receive this information), or

  • The GA or PGA has a concurrent qualified fellowship appointment as defined by IRS Publication 970, Tax Benefits for Education Link opens PDF file.

For information about eligibility and restrictions for graduate-level tuition and service fee waivers contact the Graduate College on your campus: 

Taxability of Employer-Provided Educational Assistance: Tuition and Fee Waivers

Under IRC Section 127, employers may provide employees graduate tuition and fee waivers up to $5,250 per calendar year that are excludable from taxable income.  The Office of Student Financial Aid processes the waivers.  Then UPB determines the taxability of waivers exceeding $5,250, notifies employees of the required taxation, and withholds the applicable taxes from the employees' pay.

Taxability of Employer-Provided Educational Assistance: Tuition and Fee Departmental Payments

Under IRC Section 127, employers may provide departmental payments for graduate tuition and fees on behalf of employees up to $5,250 per calendar year that are excludable from taxable income.  UPB determines the taxability of waivers exceeding $5,250, notifies employees of the required taxation, and withholds the applicable taxes from the employees' pay.  Departments must complete the Student Account Payment Request Form  and select the “Payment restricted to Graduate-level tuition and fees onlyoption.  

Resources

Questions about the taxability of waivers should be directed to UPB at:

  • UIUC:  217-265-6363
  • UIC:  312-996-7200
  • UIS:  217-206-7211

For additional information regarding the taxability of educational assistance programs, see OBFS Business and Financial Policies and Procedures Section 18.5, Fringe Benefits.

For additional information on processing payments to students, see OBFS Payments to University of Illinois Students website.

Last Updated: May 28, 2015

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