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Taxation of the BYU Tuition Benefit

Under provisions in Section 117 of the Internal Revenue Code (IRC), BYU employees, along with eligible spouses and dependents can use the BYU Tuition benefits for undergraduate BYU classes without having to pay taxes on the value of the tuition. In most cases, under the terms of IRC Section 132, employees can also take graduate classes at BYU without having the benefit taxed, to the extent the classes relate to their current job. However, the only way for spouses to exclude the value of graduate tuition benefits from taxable wages of the employee is for those spouses to be employed as teachers or researchers for the University.

BYU is required by the IRS to withhold appropriate taxes on taxable benefits. Even though the taxable benefit is for the spouse’s tuition, the related withholding tax is withheld from the employee’s salary because the benefit is available through the employee’s benefits plan.

Beginning Fall 2004, before the tuition benefit can be paid for each semester that an eligible employee’s spouse takes graduate classes, the employee is required to complete a Tuition Taxation Form for Spouses Taking Graduate Classes and turn it in to Benefits Services in D-240 ASB. The form outlines the options under the IRC. Any questions can be directed to Benefits Services at 422-4716. The tax form can be obtained from Benefits Services or from the attachment below.

Tuition Taxation Form.pdf22.38 KB
Tuition Taxation Form.doc36.5 KB

Updated by the HRS Web Team, Brigham Young University, Provo, UT 84602 - Copyright 2008. All Rights Reserved.