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Payroll & Benefits

Tuition and Fees: Waivers, Departmental Payments, and Reimbursements

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: 

Employer Provided Graduate Level Tuition and Fee Benefits - Waivers, Departmental Payments, and Reimbursements

Under IRC Section 127, employer provided waivers, departmental payments, and reimbursements of graduate level tuition and fees up to $5,250 per calendar year are excludable from the employee's taxable income.  Taxable waivers, departmental payments, and/or reimbursements exceeding $5,250 per calendar year will be reported on the employee's IRS Form W-2 and/or Form 1042-S.

Procedures:

Waivers - All tuition and fee waivers are processed by the Office of Student Financial Aid; See NESSIE for information.

Departmental Payments and Reimbursements - To initiate a graduate level tuition and fee departmental payment or reimbursement, the department completes a Student Account Payment Request Form and selects the “Payment restricted to Graduate-level tuition and fees onlyoption when submitting.  These payments will then be posted to the employee's student account, and credit balances will be refunded to the employee. This procedure applies to both UI and non-UI coursework, so employees paid or reimbursed for graduate level tuition and fees at another institution will use their credit balance refund to pay that institution.  

Resources

Questions about the taxability of employer provided graduate level tuition and fee benefits 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: April 21, 2016

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