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Talking Taxes: A Crash Course on Penn's Tuition Benefit |
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December 4, 2012,
Volume 59, No. 14 |
Tuition assistance is a popular benefit for faculty and staff at Penn—and with good reason. It covers 100% of the tuition, general and technology fees for up to six course units per academic year for credit courses you take at Penn. But if you’re considering using our tuition benefit to pursue your own academic interests, you need to know how it could affect your taxable income.
If you enroll in an undergraduate (or post-baccalaureate) program at Penn, your tuition benefit is tax-free. But if you participate in a graduate program (whether degree or non-degree), part of your tuition benefit is considered taxable income. The Internal Revenue Service (IRS) allows the first $5,250 in graduate tuition benefits to be tax-free, and anything in excess of that is added to your W-2 as income. Penn pays the taxes on your behalf by withholding them from the total gross benefit you receive, so you may be responsible for some out-of-pocket costs.
Keep in mind that this IRS provision is set to expire at the end of the year. While it has been extended several times since its initial creation, Congress hasn’t declared whether it will be extended again. If it isn’t renewed, your tuition benefit for graduate programs will be taxable from the first dollar for the spring 2013 term.
For more information about Penn’s tuition benefit, and for the latest news on the graduate tuition tax exemption, visit the Human Resources website at www.hr.upenn.edu/myhr/benefits/tuition
—Division of Human Resources
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Almanac -
December 4, 2012, Volume 59, No. 14
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