Tax Implications from Fee Waivers
Please check the tax status of your fee waiver using the matrix below. If it "Taxable" or "*" it is very important that you take this opportunity to calculate your potential taxes.
|Eligible Participant||Course Level(s)||Tax Status|
|CSU Employee||Undergraduate and Post-Baccalaureate
|Employee's Spouse or Dependent Child||Undergraduate and Post-Baccalaureate||Nontaxable|
|Employee's Domestic Partner||Undergraduate and Post-Baccalaureate||Taxable|
* Employees taking graduate courses: the courses are nontaxable up to $5,250 (unless job-related).
To calculate a tax estimate:
- Estimate the fee waiver value = regular registration fees and tuition - estimated fees charged.
- Multiply the fee waiver value x 40%.
- For example, if the fee waiver value is $2,000; the estimated tax is $800 (to be deducted from one of the employee's paychecks during the semester).
The dollar value for the waived fees will be reflected on the employee's next pay warrant following receipt of the benefit, and the State Controller’s Office will take deductions for that benefit from that payroll warrant.
Deductions? A “flat tax rate” will be applied to the amount waived or reduced. The flat tax rate is roughly 40% (Federal 25%, State 6.6%, and if applicable Social Security 6.2% and Medicare 1.45%). [Resources: Payroll and SCO - PPM - H102]
The Fee Waiver Program is a fringe benefit and as such has strict reporting requirements established by the Internal Revenue Service [Internal Revenue Code Sections 117(d), 127 and 132(d)] and the State of California Controller’s Office. The reporting requirements state that the fringe benefit must be taxed in the calendar year that the benefit was received.
How do I estimate when the flat tax will be subtracted from the employee pay check?
|Term or Semester||Census Date||Estimated Date HR Submits Data to State Controller's Office||Estimated Pay Check Date|
|Spring||2/14/2014||March 15||May 1|
|Summer||July 15||September 1|
- Dependent Program
- Dependent Eligibility
- Dependent Fees
- Tax Implications
- Fee Waiver Value
- Due Dates