Question:

What are the tax implications for utilizing this benefit?

 

Answer:

Graduate courses taken by spouses or dependents and all courses taken by domestic partners or children of domestic partners are eligible to be taxed under Internal Revenue Code Sections 117(d), 127 and 132(d).

Imputed income related to participation in the CSU Employee Fee Waiver & Reduction Program is subject to specific tax rates-- federal tax is mandated at a flat 25% tax rate and CA State at 6%. Social Security and Medicare taxes are taken at their normal rates of 6.2% and 1.45%.

The imputed income is reported to the State Controller's Office once each term. The reporting is done after Census for the term, so there is no adverse tax reporting on imputed income when an employee or an employee’s dependent drops courses.