Office of Associate Provost For Research/ Dean of Graduate Studies Scholes Hall, Rm 227A Albuquerque, NM 87131-1001 Telephone (505) 277-6128 FAX (505) 277-5271

Introductory Remarks

The 1986 IRS ruling states that any payments made to a student for services rendered, are taxable. Hence the need for establishing a policy (i.e., a course of action) for tuition remission for graduate students, so as to ensure that UNM is in compliance with this ruling.

Policy for Tuition Remission: Mostly Teaching Assistants

Contracts are issued to such students to pay salaries for services rendered with respect to duties assigned to them. These salaries are reported to the IRS.

Tuition remission is made possible for these students by awarding scholarships. However, once a scholarship is awarded, it can not be retracted, even if the student’s contract is terminated before the end of the term for which it is written.

This category may include teaching assistants and research assistants, although it would consist mostly of teaching assistants. Units should set up criteria for awarding scholarships.

Policy for Tuition Remission: Mostly Research Assistants

This category consists of those graduate students whose salaries are charged to sponsored agreements (contracts and grants). As such, most students in this category would be research assistants (RAs).

Since contracts or grants can not be charged “scholarships”, the compensation in the RA salary line must be sufficient to cover tuition remission, and some additional salary (if possible), to cover the corresponding taxes that may have to be paid by the student to the IRS.

For all budgets beginning July 1, 1997, RA tuition should be budgeted in the 1210 subcode. As a compensation line item, the tuition expense becomes subject to Facility & Administration (F&A) calculations (formerly known as indirect costs). (Effective November 1, 2005, F&A will no longer be calculated on the tuition expense.) This office is approving a waiver of F&A on the RA tuition for a period of two years; i.e., until July 1, 1999.

In order to compensate the student for the possible taxes, it will be permissible for departments to increase the budgeted salary amount for each RA up to 16%, depending upon the availability of funds within the contract or grant.

Implementation and Closing Remarks

During each semester, Student Accounting will forward to the Payroll Office the RA tuition amounts paid by the University for each individual. Payroll will include the semester’s tuition amount as part of the student’s taxable wages during one month each semester.

Please contact Ann Powell, Special Assistant to the APR, in the Office of Research Services (apowell@unm.edu), if you should have any questions. Thank you.

For additional information, see Handout from Workshop on Tax Issues of Interest to Graduate Students.