Tuition Remission

USF Employee Tuition Remission

As part of USF’s comprehensive benefits package, eligible faculty and staff can further their education, enhance their skills and pursue career development through USF’s Tuition Remission program.  Dependents including spouses/LDAs and IRS tax dependents may also be eligible to participate in this benefit.

For more information regarding eligibility, please contact gfcannella@usfca.edu or at 415-422-6851.

Application Process

To initiate the Tuition Remission (TR) process a Tuition Remission Application is required for each semester in which the employee and/or dependent(s) would like to use the benefit.  In addition to the form, documentation is required for the spouse, LDA, or IRS tax dependent using the benefit.  For more information, please click here.

Applications must be received in the Office of Human Resources no later than 5:00 p.m. on the following dates:

**If these dates fall on a weekend or holiday, then the due date is the first business day following the stated due date.

 Any employee thinking about enrolling or, who has not yet received acceptance in a program, should submit a Tuition Remission Application form by the deadline, since forms will not be accepted after the due date. Please note that the person interested in taking courses must contact the Office of Admissions regarding how to apply for a program and/or how to enroll in classes.  Please also note: employees must submit a Tuition Remission Application for each semester they or eligible dependents will be using the tuition remission benefit.  Tuition Remission Applications will only be accepted during the filing period.

Impacted Courses for 2011/2012

Certain programs are not eligible under the tuition remission benefit if deemed impacted (programs that are full). The list of impacted programs is posted by May 1st of each year for the following academic year. Current impacted programs include:

• Law - FT
• MSFA (Master of Science Financial Analysis)
• Masters in Marriage & Family Therapy
• Masters Entry Option Program in Nursing
  

*Employees covered by a CBA should refer to their agreement for specific exclusions and/or limitations. 

Graduate Course Taxability and Applying for Tax Waiver (Employees Only)

Graduate coursework is considered a taxable benefit for Spouses/LDAs and/or IRS Tax Dependents. Employees taking graduate coursework may also be taxed unless the employee qualifies for a tax waiver based on IRS guidelines.

Employees taking graduate courses may also be taxed unless they qualify for the working condition fringe tax exclusion. Pursuant to Treasury Regulation Section 1.162-5(a)(1) graduate educational expenses of an employee (but not of a dependent, spouse, or LDA) may be eligible for exclusion from taxable income under Section 132(a)(3) of the Internal Revenue Code as a "Working Condition Fringe" if the education:

1. Maintains or improves skills required by the individual in his employment or other trade or business, or
   
2. Meets the express requirements of the individual's employer, or the requirements of applicable law or regulations, imposed as a condition to the retention by the individual of an established employment relationship, status, or rate of compensation.
   

Notwithstanding the foregoing, Treasury Regulation Section 1.162-5(b)(2) provides that expenditures for education are NOT excludable from taxable income under Section 132(a)(3) of the Internal Revenue Code as a Working Condition Fringe if the educational expenses:

1. Are incurred to meet the minimum educational requirements for the individual’s current position; or
   
2. Qualify the individual for a new trade or business.

If the employee believes that his/her position meets the criteria for the graduate tax waiver as listed above then the employee must request a memo from the employee’s supervisor/manager/dean that states how the employee’s position meets the above IRS criteria, and submit it to the Human Resources Specialist, Gregg Cannella, for review no later than 30 days before the first day of classes. The Office of Human Resources will determine if the employee requesting the graduate tax waiver meets the IRS criteria. Once reviewed, the Office of Human Resources will send a notice to the employee informing the employee of the determination.

The Internal Revenue Service (IRS) and the State of California Franchise Tax Board determine the taxability of certain tuition benefits received by an employee to include tuition benefits received by the employee, his/her dependant(s) or LDAs.  The taxation is based upon the student-to-employee relationship and the course level of the classes taken.  Under certain conditions, IRS does allow an exemption of $5,250 per year per employee (Section 127 of Internal Revenue Code.  Note: IRC Sec. 127 only applies to employees; it does not apply to spouses, dependents or LDAs [unless they are ALSO employees]).

In accordance with applicable federal and state tax laws, USF will withhold taxes from the employee's gross wages according to the following schedule.  The total taxable tuition remission benefit amount will be divided by the number of months listed below.  The IRC Sec. 127 $5,250 qualified exemption (if applicable) will be applied during the first tuition application terms in the year until the entire $5,250 exemption is exhausted.  Course add and drop activity will be integrated into the billing cycle(s) on a monthly basis and is contingent upon timely completion of necessary paperwork. If the paperwork is not received in the appropriate department (Academic Enrollment Services or Human Resources) in a timely fashion, the amount of the tuition benefit will be taxed over a shorter period of time thereby increasing the tax withholding amounts and decreasing the employee's net pay.  Any and all adjustments will be made in a payroll period dedicated to adjustments (as detailed on chart below).

By the 15th of each month during the taxing period, the Payroll Office will send an email to the employee outlining the amount of benefit taxed and due to be taxed in the year.  Employees who do not receive this email, but who expect to be taxed are responsible for notifying the Payroll Office that they should be taxed. Tax periods cannot be extended past the term noted on the above table for any reason.

If an employee's gross pay is not sufficient to cover the tax liability, he/she will be required to pay the taxes owed prior to the first day of classes; otherwise, the student receiving these tuition remission benefits will be administratively withdrawn. 

If an employee terminates employment within a taxing period, he/she will be required to pay the taxes owed or disenroll from classes prior to the termination date.

Questions related to the taxable remission amounts should be directed to Payroll Office at x2837.

Case 1:    Sally is a System Analyst (staff member) of the ITS Department.  She takes 12 credit hours of undergraduate course work in the Fall Term.  She applies for and is approved to receive the Tuition Benefit. The tuition benefit received is $12,000.  Since the course work is undergraduate, Sally is not taxed.

Case 2:  Sam is a Public Safety Officer (staff member) of the Public Safety Department.  He takes 15 credit hours of graduate course work in Spring Term, which is completely unrelated to his job (and therefore non-eligible for the tax waiver treatment described above).  The tuition benefit received is $15,000.  This is the first tuition benefit received in the calendar year. The amount of taxable benefit is $9,750 ($15,000 less $5,250).   In February, March, April and May, Sam's gross taxable income will be increased by $2,438 per month.  Sam is in the 35% marginal tax bracket.  Therefore, Sam's overall net pay will be reduced by $853.30 per month.

Case 3:   John is Sally's youngest son (from Case 1).  John is taking undergraduate level classes for $5,000.  This benefit is not taxable.  In contrast, Sally's oldest son Tom is taking $12,000 of graduate level classes in Fall.  This $12,000 is fully taxable to Sally. Sally is in the 22% tax bracket. Therefore, Sally's gross taxable income will be increased by $4,000 per month in October, November, and December, and net pay will be reduced by $880.00 per month.

Case 4:  Michael is a Part Time Faculty member and is currently not teaching in Summer Term. Michael can use the Tuition Remission Benefit, but he does not have a gross wage from a current assignment. His son takes 3 credit hours of graduate work (taxable) and the tuition benefit received is $2,600. Michael must pay the tax directly at the yearly taxation rate, approximated at 42%. Michael must pay $1,092 directly to Payroll Services before the first day of classes.