The University of Pittsburgh offers tuition remission scholarships to full-time employees, their dependents, and their spouses or domestic partners. The taxability of education credits by degree level and beneficiary are listed in the chart below.
Taxability of Education Benefits
| Undergraduate Level | Graduate Level | |
| Employee | Non Taxable | Amount greater than $5250.00 is taxable* |
| Dependent | Non Taxable | N/A |
| Spouse | Non Taxable | Entire amount is taxable* |
| Partner | Entire amount is taxable* | Entire amount is taxable* |
*Taxability applies to Federal Income Tax, Social Security, and Medicare.
Viewing Tax Benefits
The taxation of education benefits is shown on both the student’s University account and the associated employee’s pay statement in Pitt Worx. Tax is withheld from the education benefit at a 29.65% rate and reported annually on the employee’s pay statement in Pitt Worx. Taxable education benefits will be listed as scholarship on the pay statement. An email notification will be sent to the associated employee in the Fall to provide the date of the pay statement in which this reporting will occur.
Student’s Account (PeopleSoft)
The student’s account shows the taxable scholarship amount, the estimated tax withheld, and the net scholarship that is credited to the student’s account. The tax owed is estimated at 29.65% which is the total of 22% Federal, 6.2% Social Security, and 1.45% Medicare. See below example of graduate level education benefits for an employee.
| Taxable scholarship | ($6250 Scholarship - $5250) | $1000.00 | |
| Less estimated tax withheld | ($1000 Taxable Amount x 29.65%) | - | $ 296.50 |
| Net taxable amount posted to account | = | $ 703.50 | |
| Plus non-taxable portion of scholarship | + | $ 5250.00 | |
| Total scholarship posted to account | = | $ 5953.50 |
Payslip (Pitt Worx)
The full taxable portion of the scholarship and the net amount posted to the student’s peoplesoft account will be added in Pitt Worx to allow for proper Form W-2 reporting. The information will be available on an off-cycle pay statement in Pitt Worx. See below example.
| Taxable scholarship reported on payslip | $1000.00 |
| Net taxable scholarship CERT reported on payslip | $ 703.50 |
The taxable education benefits will be reported on the Form W-2 which will be used for tax filing purposes. The off-cycle pay statement in which the benefit is reported will be used for informational purposes only and will not impact take-home pay for the employee. For more information, please review IRS Publication 15.