HR Update

Back to School Savings: A Message From the Tax Management Office

It's important to note that some Regents Scholarship benefits are taxed, but some employees can apply for working condition fringe benefit to have the tuition benefit excluded from their taxable income. Read this message from the Tax Management Office for more information.

Undergraduate-level tuition benefits provided to employees can be excluded from taxable income. By default, graduate-level tuition benefits are included in taxable income if their value within a calendar year is over $5,250. Employees may find that their paycheck decreases because of the extra withholding to cover that income.

The good news is that if a graduate course is job-related and meets certain IRS criteria, the tuition benefit can be excluded from income as a working condition fringe benefit. The even better news is that the Tax Management Office has a process to determine whether an employee can use that exclusion—and it has been updated!

Our new exclusion form and instructions are available on our home page or in the Regents Scholarship section of our Tax Topics page. If you have used this process before, the form will look familiar. Some key requirements remain:

  • A separate application for each course
  • A clear description of how the course content relates to the employee’s current job
  • IRS criteria questions

What’s new:

  • Certification from HR lead is no longer needed 
  • The application can be submitted by the employee after supervisor approval
  • Instructions include more frequently asked questions and examples

We hope that these changes will make the application more user-friendly.

Applications should be submitted ahead of the billing due date for the term. Submit applications and any questions to taxhelp@umn.edu.

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