Taxable Benefit

The Internal Revenue Code (IRC) governs the taxation of employer-provided training and educational assistance, including fee waivers. All graduate-level coursework taken by an employee's spouse, dependent child or domestic partner will be reported as taxable income for the employee. Undergraduate-level coursework taken by an employee's domestic partner will also be considered taxable income for the employee.

Once reported, this tax appears on a single month's paycheck warrant for each academic term. Amounts vary depending upon college of major and the number of units taken.

Additional Details

The Internal Revenue Code (IRC) provides three ways to make employer-provided training and
educational assistance, including fee waivers and reductions, excludable from taxable income:

Qualified Tuition Reduction under Internal Revenue Code Section 117(d);
Educational Assistance Programs under Internal Revenue Code Section 127; and
Working Condition Fringe Benefits under Internal Revenue Code Section 132(d).

By coordinating the three Internal Revenue Code Sections under the CSU Fee Waiver and
Reduction Program, the following chart reflects the tax-free or taxable benefits resulting for eligible CSU employees and their eligible spouses, domestic partners, and/or dependent children:

Eligible Participant	Course Level(s)	Tax Status
CSU Employee	Undergraduate	Nontaxable
CSU Employee	Graduate	Nontaxable
Employee’s Spouse/Dependent Child	Undergraduate	Nontaxable
Employee’s Spouse/Dependent Child	Graduate	Taxable
Employee’s Domestic Partner	Undergraduate	Taxable
Employee’s Domestic Partner	Graduate	Taxable

Attachment D provides a tax summary of IRC sections applicable to the CSU Fee Waiver and
Reduction Program.