Taxation

Taxation Information

• The value of fees waived for the eligible employee's use of their own Fee Waiver benefit is non-taxable for undergraduate courses.
• The value of fees waived for the eligible employee's use of their own Fee Waiver benefit for graduate/doctorate classes is nontaxable up to $5,250 per calendar year. The value of fees waived that exceeds $5,250 in a given calendar year will be reported to the State Controller's Office and the additional taxes taken from the employee's pay warrant.

Employees are encouraged to consult with their personal tax advisor to determine if courses taken are job related and include the deduction on their personal tax return, if eligible.

Taxation on Dependent Fee Waiver Benefit

The value of fees waived for all graduate/doctorate level coursework taken by an employee’s spouse, domestic partner or dependent child through this program continues to be reported as taxable income to the employee and the additional tax deductions taken from the employees' pay. All undergraduate level coursework taken by an employee’s domestic partner through this program is taxable as well.

Imputed Tax Rates

Imputed income related to participation in the CSU Employee Fee Waiver & Reduction Program, as outlined above, is subject to specific tax rates as follows:

• Federal 22%
• State of California 6.6%
• Social Security 6.2%
• Medicare 1.45%
• Total Imputed Tax Rate 36.25%

The imputed income is reported to the State Controller's Office once each term. The reporting is done after Census for the term, so there is no adverse tax reporting on imputed income when an employee or an employee’s dependent drops courses.

Fee Waiver and Reduction Program Costs

Please review the Fee Waiver and Reduction Costs to determine the amount of tuition and/or fees you may still be responsible for while participating in the program.

Applicable Internal Revenue Code (IRC) sections:

• Qualified Tuition Reduction under Internal Revenue Code Section 117(d); and
• Educational Assistance Programs under Internal Revenue Code Section 127;
• Working Condition Fringe Benefits under Internal Revenue Code Section 132(d) (for employees to pursue through their personal tax advisor, if applicable).