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Tax Implications

Tuition Benefits May Be Subject to Taxation

Type of Courses	Tax Obligation
Undergraduate Courses	Undergraduate classes are not taxed unless you are enrolled in a graduate program, in which case they are treated as graduate courses - see below
Graduate Courses	Any tuition benefits that exceed $5,250 per calendar year (not per semester) for graduate courses (or undergraduate courses taken while enrolled in a graduate program) are treated as income and are subject to federal income tax and FICA (32.65%)

How Taxes are Withheld

Carnegie Mellon is obligated to withhold from your pay any federal taxes you may owe on your tuition benefits. Federal taxes will automatically be withheld from your paycheck.

The tax amount will be withheld over three consecutive paychecks (unless you request fewer) beginning in the month following the semester's add/drop date. If your application for benefits is delayed for any reason, the taxes will be withheld over a shorter period of time.

If you drop a course after the add/drop date and have already paid a portion or all of the taxes owed, you will need to request special permission from the institution to be relieved of the tuition charges and the resulting taxes.

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For more information:

• Internal Revenue Service
  • IRS Publication 919 - How Do I Adjust My Tax Withholding?
  • IRS Publication 970 - Tax Benefits for Education.
• Summary of Tax Credits and Education Accounts (.pdf)
• U.S. Department of Education - Hope Scholarship Credit and Lifelong Learning Credit
  
• FinAid! The SmartStudent Guide to Financial Aid
  
• The Coalition of Higher Education Assistance Organizations

© Carnegie Mellon Human Resources 2004