Taxation

• Taxation of Undergraduate Courses (Below 4000)
• Taxation of Graduate Courses (4000 & Above)
• How Withholding Works

On What Can the Support Staff Member be Taxed?

Taxation of Undergraduate Courses (Below 4000)

If the tuition benefit is for an undergraduate course, it is not considered taxable income unless the student covered by a staff member’s Tuition Exemption Benefit is taking the course as part of a graduate degree program.

Taxation of Graduate Courses (4000 & Above)

Support Staff

Beyond the support staff member’s first $5,250 in a calendar year as a graduate student, Tuition Exemption that pays for graduate-level courses is considered taxable income, with the following exceptions:

• The benefit is not taxable if the staff member is taking graduate-level courses as part of an undergraduate degree program.
• The benefit is not taxable if the staff member takes graduate-level courses that are considered “job related,” fulfilling the following two conditions established by the IRS:
  1. The course either a maintains or improves skills required in your current position and/or is required by the University, or by law or regulations, to keep the Officer’s current job or salary;
     
     and
     
  2. The course does not enable the staff member to meet the minimum education requirements for his or her current job, and does not qualify him or her for a new trade or business.
     Note: Graduate courses taken as part of a doctoral program cannot be job-related. According to IRS regulations, they always qualify the student for a new trade or business.

If these conditions hold for every graduate course a staff member takes during a term, he or she should obtain the Job-Related Graduate Course Certification  online or from the local Human Resources office. The completed form, signed by the staff member’s supervisor and submitted to the Student Service Center, 201 Kent Hall  (Morningside) or Student Administrative Services in 1-141 Black Building (Medical Center), ensures that no taxes related to your tuition benefit will be withheld from the staff member’s paycheck.

Support Staff’s Spouses and Dependents

There is no taxation cutoff for the amount of Tuition Exemption in a calendar year. The value of all Tuition Exemption that pays for graduate-level courses for a staff member’s spouse and dependents is considered part of the staff member’s taxable income, unless a graduate-level course is taken as part of an undergraduate degree program.

Support Staff’s Same-Sex Domestic Partners and their Dependents

The value of tuition exemption for same-sex domestic partners and the dependents of same-sex domestic partners is considered taxable income by the federal government, and therefore Columbia will withhold taxes. This applies to both undergraduate and graduate courses.

How Withholding Works

Income Tax Withholding for Support Staff

The cash equivalent of any taxable tuition benefit will be included in your income statement on your pay stub under “Taxable Tuition.” This will affect the amount of federal, state, local, and FICA taxes deducted from your pay.

The deductions occur on an annualized basis as follows: The amount of taxable tuition is added to your base salary. The resulting total is taxed according to the annualized table, which is based on your income level.

The University will try to spread the tax liability for tuition benefits over as many pay periods as possible:

• Fall Term: Taxes withheld October through January (seven paychecks)
• Spring Term: Taxes withheld February through May (seven paychecks)
• Summer Term: Taxes withheld June through September (seven paychecks).

If the Application for Tuition Exemption form is not submitted early enough in a term, the University will have fewer paychecks from which to withhold taxes—thus increasing the deduction in each pay period.

Form 1099

In cases where the staff member does not receive a W-2 form—due to an unpaid leave of absence, retirement, or death—the University reports the income to the government using a Form 1099, a copy of which is sent to the support staff member (or to the student, if the staff member is deceased) at the end of the calendar year.

Refunds of Withheld Taxes

If the staff member or family member withdraw from the University, drop a class, or completes a Job- Related Certification form, taxes may already have been withheld from the staff member’s paycheck. To prevent additional withholding, contact Student Financial Services in 210 Kent Hall. The Payroll Office will refund the taxes that have already been withheld once Student Financial Services has processed the notice of withdrawal and notifies Payroll.

Note: Dropping all courses means withdrawing from the University. The University charges a $75 fee for all withdrawals from the University and this fee is not covered under this Tuition Exemption Benefit Program.

The Payroll Office will also refund the taxes already withheld if the support staff member submits a Job-Related Graduate Course Certification late in the term.

Questions

Questions about the amount of taxable tuition reported to the Payroll Office should be directed to the Tuition Exemption Area of Student Financial Services at (212) 854-6548.