Tax Treatment

Tax Disclaimer

If the IRS challenges the University’s interpretation of the Internal Revenue Code with regard to tuition benefits, you may be liable for income tax on the cash value of the benefits, plus any penalty and interest assessed. Please consult your tax advisor for specific IRS tax regulations.

On What Can the Officer be Taxed?

Taxation of Undergraduate Courses (Below 4000)
Taxation of Graduate Courses (4000 & Above)
How Withholding Works
Questions

Taxation of Undergraduate Courses (Below 4000)

Officers, Spouses, and Their Children

The Tuition Exemption Benefit for an undergraduate course is not treated as taxable income unless the student covered by an Officer’s Tuition Exemption Benefit is taking the course as part of a graduate degree program.

Same-sex Domestic Partners and Their Children

The value of the Tuition Exemption Benefit for undergraduate courses for same-sex domestic partners and their children is treated as part of the Officer’s taxable income by the federal government and, therefore, Columbia University will withhold taxes.

Taxation of Graduate Courses (4000 & Above)

Officers

The first $5,250 in a calendar year is exempt from taxation. Any additional Tuition Exemption in a calendar year that pays for graduate-level courses is treated as taxable income, with the following exceptions:

The benefit is not taxable if the Officer is taking graduate-level courses as part of an undergraduate degree program.
The benefit is not taxable if the Officer takes graduate-level courses that are considered “job related,” fulfilling the following two conditions established by the IRS:
1. The course either maintains or improves skills required in your current position and/or is required by the University, or by law or regulations, to keep your current job or salary;
  and
2. The course does not enable you to meet the minimum education requirements for your current job, and does not qualify you for a new trade or business.
  Note: Graduate courses taken as part of a doctoral program cannot be job-related. According to IRS regulations, they always qualify the student for a new trade or business.

If these conditions hold for every graduate course an Officer takes during a term, the Officer should fill out and submit a Job-Related Graduate Course Certification Form (PDF). The completed form, signed in ink by the Officer’s supervisor and submitted to Student Financial Services in 205 Kent Hall (Morningside) or Registration & Financial Services @ CUMC in 1-141 Black Building (Medical Center), ensures that no taxes related to the tuition benefit will be withheld from the Officer’s paycheck. This form should be submitted with the Tuition Benefit Eligibility Form.

Officers’ Spouses and Children

The value of all Tuition Exemption that pays for graduate-level courses for an Officer’s spouse and children is treated as part of the Officer’s taxable income, unless a graduate-level course is taken as part of an undergraduate degree program. Therefore, Columbia will withhold taxes.

Officers’ same-sex domestic partners and their children

The value of all Tuition Exemption for graduate courses taken by same-sex domestic partners and their children is treated as part of the Officer’s taxable income by the federal government. Therefore, Columbia will withhold taxes.

How Withholding Works

Income Tax Withholding for Officers

The cash equivalent of any taxable Tuition Exemption benefit (as explained above) will be included in the Officer’s income statement, on the pay stub under “Taxable Tuition.” This will affect the amount of federal, state, local and FICA taxes deducted from the Officer’s pay.

The taxation of the Tuition Exemption benefit is determined on an annualized basis. The amount of taxable tuition is added to the Officer’s base salary. The resulting total is taxed according to the annualized table, which is based on the Officer’s income level.

The University will attempt to spread the tax liability for tuition benefits over as many pay periods as possible:

Fall Term: Taxes Withheld October through December
Spring Term: Taxes withheld February through May
Summer Term: Taxes withheld June through September

If the Tuition Benefit Eligibility Form and Job-Related Graduate Course Certification (PDF) are not submitted by the end of the Change of Program period each term, the University will withhold taxes. Officers who can prove the courses are job-related may be eligible to deduct the income from their annual IRS tax filing.

Form 1099
In cases where the Officer does not receive a W-2 form—due to an unpaid leave of absence, retirement, or death—the University reports the income to the government using a Form 1099, a copy of which is sent to the Officer (or to the student, if the Officer is deceased) at the end of the calendar year.

Refunds of Withheld Taxes

When the Officer or family member withdraws from the University or drops a class, taxes may already have been withheld from the Officer's paycheck. To prevent additional withholding, contact Student Financial Services in 205 Kent Hall.

When a withdrawal is submitted, Columbia University Payroll will reverse the taxable tuition amount in the employee's next paycheck, triggering a decrease in tax. Please note that the amount of tax refunded may not be the same amount as originally withheld; this is because of tax bracket fluctuations using the annualized taxation method. Any tax variance will be recovered when the Officer files the annual tax return using the W-2, which reflects the lower taxable wage base.

Note: Dropping all courses means withdrawing from the University. The University charges a $75 fee for all withdrawals from the University, and this fee is not covered under this Tuition Exemption Benefit Program.

Questions about the amount of taxable tuition reported to the Payroll Office should be directed to the Tuition Exemption area of central Student Financial Services at (212) 854-6548 or tuitionexemption-students@columbia.edu.