Residency & Taxation

California Residency Requirement

  • The fee waiver applies only to certain fees incurred by California residents.
  • Employees who do not meet in-state residency requirements must pay non-resident tuition charges based enrolled units.
  • For residency questions, contact Admissions at: 408-283-7500 or by email: admissions@sjsu.edu.

Taxation

The table below summarizes taxable and non-taxable courses:

Eligible Participant Course Level Tax Status
CSU Employee Undergraduate
Graduate		 Nontaxable
Nontaxable up to $5,250
Employee's Spouse/Dependent Child Undergraduate
Graduate		 Nontaxable
Taxable
Employee's Domestic Partner Undergraduate
Graduate		 Taxable
Taxable
Why are courses taxable?
  • The Tuition Fee Waiver Program is a fringe benefit and as such has strict reporting requirements established by the Internal Revenue Service [Internal Revenue Code Sections 117(d), 127 and 132(d)] and the State of California Controller鈥檚 Office. The reporting requirements state that the fringe benefit must be taxed in the calendar year in which the benefit was received.
  • Contact the  Program Coordinator if you have any questions.
Which courses are taxable?
  • Graduate/Doctorate level courses taken by you, the employee, which exceed the $5,250 threshold. The tax will be withheld from your paycheck. You may consult a personal tax advisor to determine if courses taken are job related pursuant to IRC Section 132(d) and submit the deduction on your personal tax return.
  • Graduate level courses taken by your qualified dependent will be reported as imputed taxable income to you, the employee.
  • Undergraduate level courses taken by your domestic partner will also be considered imputed taxable income.
Which courses are not taxable?
  • Undergraduate level courses you, the employee, take are non-taxable.
  • Graduate/Doctorate fees for you, the employee, are non-taxable if the total fees waived do not exceed $5,250 in a calendar year.
When are the taxes taken?
  • The imputed income is reported to the State Controller's Office once a semester after enrollment census. There is no adverse tax reporting on imputed income when an employee or an employee鈥檚 dependent drops courses. 
  • The additional tax withholdings are deducted from the employee鈥檚 first and second paychecks following this reporting.
How much will I be taxed?
  • The flat rate tax method is used to determine the amount of imputed tax an employee is subject to if the courses they or their dependents take are taxable.
  • The current flat tax rate is 36.25%; and may be adjusted annually.
  • The tax is comprised of:
    • Federal Tax (currently 22%)
    • State Tax (currently 6.6%)
    • Social Security Tax (6.2%) (if the employee is subject to this tax on normal wages)
    • Medicare Tax (1.45%) (if the employee is subject to this tax on normal wages)
  • Calculate the amount:
    • Total Fees Above Threshold x Flat Tax Rate
    • Example:
      • Total Value of Fee Waiver = $8,750
      • Threshold Amount = $5,250
      • Flat Tax Rate = 36.25%
      • $8,750 - $5,250 = $3,500 Total Taxable Fees
      • $3,500 x 36.25% = $1,268.75 Imputed Tax Value (withheld from two consecutive paychecks)
Questions? Contact the  Program Coordinator for more information.