Tuition Reimbursement is Taxable

Did you know that tuition reimbursement is tax reportable over a certain amount? If you have been the recipient of reimbursement for tuition you have probably seen details that amounts over $5250 are tax reportable, but what does that mean exactly? Any tuition reimbursements that are issued during the qualifying tax period (November 1^st to October 31^st) that exceed $5250 will be taxed. Typically, the taxable portion is reported on the next qualifying paycheck. For example, Fall tuition reimbursement $6,400 paid out on Dec 1 + Spring tuition reimbursement $4,400 paid out on May 4 ($10,800-$5,250) = $5,550 taxable income reported on your next paycheck. DEM has started to offer the option of having tax reduced for reimbursements at the time of payment. You can elect to have a 30% tax withholding from your reimbursement.  Please keep in mind, 30% is an estimated withholding and your taxable rate may be higher or lower. The adjustment would occur on your next qualifying paycheck. For more information regarding tuition reimbursement: https://hr.wisc.edu/professional-development/funds/tuition-reimbursement/ If you have any questions, please contact Kelly Layton.