I live in Wisconsin. I am considering taking a new job at a university. If I take the job, I will have a pay cut that will put our joint AGI next year at $45K; but I will be working for a University and will be entitled to free tuition if I take that job. My husband and I will each recieve about $15K worth of free tuition for graduate degrees if I take the job.
Is the value of the tuition that we would recieve for “free” ($30K) a taxable item?
If it is taxable, does that mean that we get to take deductions related to being a student, as if we had recieved and extra 30K in income, and then paid $30K in tuition?
Thanks!
Not sure how a university works, but I went back through school with my company reimbursing me. Federally the first $5,250 is not taxes after that it was taxed at the higher “Bonus rate” 30 some percent. State and local was taken out of everything. I was able to collect or should say deduct the remaining that was not taxed on the federal, state screwed me and kept it all. Speak with you human resource person to find out how it is handled in your situation
The usual situation is that your tuition benefit will be tax-free, but your spouse’s benefit is going to be taxable income to you, unless your spouse is also an employee, teaching assistant, or research assistant.
You could take tuition and fees deduction or the Lifetime Learning Credit (or possibly unreimbursed employee expenses, if the courses are work-related) for the taxable spouse tuition benefits.
Your benefits office will have full details on this, you may want to ask them about it before deciding on accepting the job or having your spouse enroll.
No, the free tuition that you get as an employee won’t be taxable to you. You won’t be able to take education credits for that tuition though, since you won’t be paying it. If you still will have to pay fees (I did when I attended grad school free, as a university employee), you can still take the education credits for the amount of the fees.
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The usual situation is that your tuition benefit will be tax-free, but your spouse’s benefit is going to be taxable income to you, unless your spouse is also an employee, teaching assistant, or research assistant.
You could take tuition and fees deduction or the Lifetime Learning Credit (or possibly unreimbursed employee expenses, if the courses are work-related) for the taxable spouse tuition benefits.
Your benefits office will have full details on this, you may want to ask them about it before deciding on accepting the job or having your spouse enroll.
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