Pursuant to the provisions of Section 117, 127, and 132 of the Internal Revenue Code, relative to applicable employment income and taxation for qualified tuition scholarship:
- Undergraduate level education is not treated as employment income and not taxable.
- Graduate level education is taxable for federal income tax withholding, Social Security, and Medicare taxes to the extent of the tuition scholarship amount; the exception from taxation is a graduate engaged in providing teaching and research assistant activities for the university.
- Tuition scholarship for a domestic partner in an undergraduate or graduate level education is taxable for federal income tax withholding, Social Security, and Medicare taxes to the extent of the tuition scholarship amount.
Taxable tuition scholarship, as mentioned above, will be reported to the Payroll Office to ensure appropriate employee tax assessment and reporting requirements, e.g, annual W2 Wage and Tax Statement.