NSHE Grant in Aid
Taxable Income to Employee
Under IRS Publication 970 Qualified Tuition Reduction. You don’t have to include a qualified tuition reduction in your income, if you receive it from an eligible educational institution and.
- You are an employee of the eligible educational institution.
- You were an employee of the eligible educational institution, but you retired or left on disability.
- You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability.
- You are the dependent child or spouse of an individual described in (1) through (3) above. For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25.
Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. It is provided by an eligible educational institution. You are a graduate student who performs teaching or research activities for the educational institution.
If you do not meet both of the requirements listed above you must include in income any other tuition reductions for graduate education that you receive. How To Report Any tuition reduction that is taxable should be included as taxable wages on your Form W-2, box 1. Employees report the amount from Form W-2, box 1, on Form 1040, line 1.
Under IRS Publication 15-B Educational Assistance. An educational assistance program is a separate written plan that provides educational assistance only to your employees. You can exclude up to $5,250.00 of educational assistance you provide to only an employee under an educational assistance program from the employee’s wages each year. Assistance over $5,250.00 annually that was provided to an employee must be included as taxable wages on your Form W-2, box 1. Employees report the amount from Form W-2, box 1, on Form 1040, line 1.
Summary for Taxable Income for Grant in Aid
Employee:
- Under graduate classes exempt from Federal Taxable Income. Qualified Tuition Reduction
- Graduated level classes exempt from Federal Taxable Income for the first $5,250.00 annually amounts over $5,250.00 are Federal Taxable Income. Educational Assistance
Spouse and Dependents:
- Under graduate classes exempt from Federal Taxable Income. Qualified Tuition Reduction
- All Graduated level classes are Federal Taxable Income from $1.00 and above. Qualified Tuition Reduction