Per IRS regulations, only the first $5,250 of the tuition waiver provided by the Employee Education Program benefit is non-taxable. Any amount in excess of $5,250 is taxable income to the employee and must be taxed and included on the employee’s W-2 for the year.
For the pay period ending Sept. 21 — reflected in the Sept. 30 paycheck — University Payroll & Tax Services recorded the taxable amounts as miscellaneous taxable income (MTI). This was also the third paycheck in September, which typically has fewer deductions. MTI does not add to gross pay, so anyone affected did not receive any additional income in his or her paycheck as a result of this transaction.
In some cases, the MTI will be spread over two pay periods, so affected employees may notice a similar amount for the pay period ending Oct. 5 as well.
Payroll-related taxes for this MTI amount are deducted from affected employees’ paychecks, potentially reducing the net paycheck amount. As a rough estimate, the taxes are:
Social Security (OASDI) 6.2% (or 7.5% for FICALT participants)
Federal Withholding varies, based on the employee’s W-4 and income
All participating employees with taxable (MTI) income were notified by email of their taxable portion on Sept. 13. Questions? Please contact University Payroll and Tax Services at email@example.com or (352) 392-1231.