Taxation of Tuition Benefits for GSAs

Graduate Service Assistants – Information Regarding Taxation of Tuition Benefits

Tuition benefits offered to graduate assistants are generally excluded from taxable income under section 117(d) of the Internal Revenue Code (IRC). However, section 117(d) only excludes tuition benefits for graduate students who are engaged in teaching or research activities. Graduate Service Assistant activities do not fall within this exclusion; therefore, tuition benefits excluding nonresident waivers in excess of $5,250 per calendar year must be added to their income as a taxable fringe benefit.

For Graduate Service Assistants whose tuition benefits are expected to exceed $5,250 in a calendar year will be notified by the payroll department in early fall and the applicable taxes will be withheld. This will result in a decrease in net pay. To reduce the impact of this decrease, the tax withholding will be spread over multiple pay dates. The impact on net pay will be dependent upon each individual’s tax situation.