Notification of IRS Tax Requirements for Graduate Assistant Tuition Waivers
Per current Internal Revenue Service regulations (IRC 127), effective January 2012 Western Illinois University will begin withholding taxes on graduate assistant tuition waiver amounts exceeding $5,250 in the calendar year. Research, teaching support and teaching assistant tuition waivers are exempt from taxation under current tax laws.
All graduate assistant tuition waivers are considered taxable income unless exempt under the Internal Revenue Code (IRC). For graduate assistants, only $5,250 per calendar year (January – December) is exempt. If the amount of tuition waiver exceeds $5,250, the excess is deemed income under the IRC and additional withholding may be applied. Withholding tax is applied to the graduate assistant’s earnings (monthly stipend) on the waiver amount exceeding $5,250. For spring contracts, withholdings will be applied on the March, April and May checks. Fall contracts will have withholdings applied on the October, November and December checks.
Graduate Assistants should be aware the tax liability may result in a reduction in net pay depending on the value of the tuition waiver and the stipend amount received for assistantship duties. The value of the tuition waiver exceeding $5,250 is subject to withholding tax based on the completed W-4 on file with the Payroll Office.
The Graduate School recommends that graduate assistants track the amount of their tuition waiver benefit in excess of $5,250 each calendar year so they may plan in advance for the taxes to be withheld. Students may access STARS to monitor the amount of tuition waivers applied to their student account. General questions concerning taxation of graduate assistant tuition waivers may be directed to the School of Graduate Studies at (309) 298-1806. Specific questions concerning withholdings may be directed to the Payroll Office at (309) 298-1867.
Frequently Asked Questions (FAQ) concerning taxation of tuition waivers may be found online at wiu.edu/grad.