Tax on tuition waiver?

[mewtoo]

I got my pay stub and it seems that they are counting my waiver as earned income and are taxing it, making it where out of my $900 paycheck, nearly $400 is being held out for taxes! I've looked up the tax code and it seems like if you are a RA or TA (I'm an RA) then your waiver should not be taxed. I'm very confused though (how could they make a mistake like that?). Am I right in believing that my waiver should not be taxed? I plan on going to the HR office tomorrow and asking about it so they can fix it before I'm to get paid on Friday if its messed up, but I don't want to be completely off base.

 

Here is one document I found that leads me to believe that, as well as other school's websites I've seen.

http://gradschool.utk.edu/files/graduate%20fee%20waiver%20faq.pdf

Edited September 11, 2013 by mewtoo

[guttata]

I got my pay stub and it seems that they are counting my stipend as earned income and are taxing it, making it where out of my $900 paycheck, nearly $400 is being held out for taxes! I've looked up the tax code and it seems like if you are a RA or TA (I'm an RA) then your waiver should not be taxed. I'm very confused though (how could they make a mistake like that?). Am I right in believing that my waiver should not be taxed? I plan on going to the HR office tomorrow and asking about it so they can fix it before I'm to get paid on Friday if its messed up, but I don't want to be completely off base.

 

Here is one document I found that leads me to believe that, as well as other school's websites I've seen.

http://gradschool.utk.edu/files/graduate%20fee%20waiver%20faq.pdf

 

If I'm understanding you correctly, your posted link refers to tax exemption for your tuition waiver, which is NOT your stipend. Your stipend is earned income (at least, it is for me - everything is reported on a W2 and taxes are withheld on each check). Your tuition waiver, on the other hand, is money that never passes through your hands and is the reason you don't get a bill for tuition. You are not being taxed on that.

 

TL;DR - Stipend != tuition waiver

[mewtoo]

If I'm understanding you correctly, your posted link refers to tax exemption for your tuition waiver, which is NOT your stipend. Your stipend is earned income (at least, it is for me - everything is reported on a W2 and taxes are withheld on each check). Your tuition waiver, on the other hand, is money that never passes through your hands and is the reason you don't get a bill for tuition. You are not being taxed on that.

 

TL;DR - Stipend != tuition waiver

No, I know my stipend is being taxed and is supposed to, its a job. However on my pay stub it actually states in my earnings my tuition waiver. I'm only getting paid 900, but because of that it says I'm earning nearly 3k. They are taxing me on it according to my pay stub.

"

Description               Rate       Hours   Earnings              Earnings

Teaching Graduate Assista                      900.00                  900.00

Tuition Fee Waiver                                 1,831.88                1,831.88

Total:                                                         2,731.88                2,731.88

"

 

"   GROSS     TAXABLE GRS       TAX          DED        NET PAY

     900.00         2,731.88             372.88         0.00       527.12

     900.00         2,731.88             372.88         0.00       527.12 "

 

See, they are counting my tuition remission as taxable gross income.

[mewtoo]

If I'm understanding you correctly, your posted link refers to tax exemption for your tuition waiver, which is NOT your stipend. Your stipend is earned income (at least, it is for me - everything is reported on a W2 and taxes are withheld on each check). Your tuition waiver, on the other hand, is money that never passes through your hands and is the reason you don't get a bill for tuition. You are not being taxed on that.

 

TL;DR - Stipend != tuition waiver

Oh, I see the typo I made! I totally wrote stipend in the paragraph I wrote. I meant my waiver. I'll edit it.

[Elli389]

I'm not sure what school you're attending, but it looks like you are classified as a "Teaching Graduate Assistant"?

This may be relevant to your question:

http://www.wiu.edu/graduate_studies/current_students/tax_questions.php

 

 

*eta

I see that this is on tuition waived over $5250, but I'm not sure what your situation is.

Edited September 12, 2013 by Elli389

[Eigen]

My understanding from the IRS code, is that it is considered a taxable "benefit" that the University is paying you. 

 

That said, you should get it back when you file yearly, as you will be taking a deduction for your educational expenses equal to the amount your tuition waiver is "paying" you. 

 

You should be able to adjust your withholdings through the University until then, though.