🚀 go-pugleaf

FYI
I received the following message from the National Association of
Graduate and Professional Students. The message is relevant to
graduate students who are being taxed by their University for their tuition
waivers.

forwarded message:
*******************************

Dear NAGPS Members and Friends;

Graduate students from at least two universities have notified NAGPS in
the past few days that these universities have begun to withhold
additional income taxes from stipends of teaching and/or research
assistants under the presumption that the tuition waivers of those
Tas/RAs are now considered taxable income.  In both cases, the
students have indicated that the universities have said that the summer
tax legislation is behind this change.  NAGPS has not yet investigated the
specific  examples (our National Conference begins tomorrow and our
energies have  been focused in this direction).  However, these reports
greatly concern us.

NAGPS nor its volunteers or staff are attorneys, nor should any
information or advice be considered "tax advice" that one would get from
an attorney or accountant.  But we played a significant role in this
summer's tax bill, and continue to work with the IRS, the Treasury and
Education Departments, Congress and the White House to ensure that
the  new regulations are implemented so they benefit students.  Our best
information would indicate the following:

1.      There was no change in Section 117d of the Internal Revenue
Code.  This section (see Section 117d5) specifically exempts MOST
tuition  waivers granted to graduate teaching and research assistants at
universities  and colleges.  Efforts to eliminate this tax exemption WERE
DEFEATED and  the change was never made.
2.      There was no change to Section 127 of the Internal Revenue
Code  with respect to graduate students.  Employer Provided Educational
Assistance given to graduate/professional students has been
considered taxable since July 1, 1996.  Changes to Section 127 this
summer extended  the benefit for undergraduate courses only.
However, Section 117d5 was  created in 1988 SPECIFICALLY to ensure
that one kind of Employer Provided  Educational Assistance (tuition
waivers/reductions) provided by one  category of employer
(universities/colleges) for one category of employee  (graduate students
performing teaching or research duties for those  employers) were
exempt from being treated as income.
        We believe that the publicity about the extension of 127 to
undergraduate courses _only_ may have prompted some universities to
believe that Section 127 had changed for graduate students.  Section
127 benefits  expired for graduate students on 7/1/96 - more than one
year ago.
3.      The only changes affecting graduate students were positive
ones.  The student loan interest deduction was restored (up to $2,500 in
student loan interest will be deductible when this is implemented).  The
Lifetime Learning Tax Credits will be available to graduate students as
well as undergraduates (up to 20% of $5,000 in tuition payments will be
available for a tax credit until the year 2000 and 20% of $10,000 in
tuition payments will be available for a tax credit after that year).
There were other changes in the tax code affecting students, but none
change the tax status of tuition waivers to our knowledge.
4.      Most of the elements of the Tax Reduction Act of 1997 will not be
implemented until 1998 or 1999.  Changes effective immediately by
universities, and blamed on this tax act, should be automatically suspect
by students and investigated.

NAGPS is interested in learning more about students who are being
taxed on their tuition waivers.  It is our opinion that legislation adopted by
Congress in 1988, as well as the debate around Section 117d this past
summer, CLEARLY implies that Congress intends that tuition waivers for
most graduate teaching and research assistants should remain tax-free
benefits of their employment by the nation's universities and colleges.
Toward the end of the debate, NAGPS was unable to find ONE SINGLE
MEMBER  OF CONGRESS who would go on record as supporting the
eliminate of  Section  117d5 for graduate research/teaching assistants.
There is simply no  legislative justification for any university to begin
withholding taxes tuition waivers (except in rare cases where the tuition
waiver is the  only compensation to the TA or RA).

We will vigorously defend this position because it is of such great
interest to all graduate research and teaching assistants, as well as the
universities that employ them, the faculty that supervise them, and the
students who receive the instruction.  We are confused why any
university  would take a position not supported by tax law and one that
increases  their costs and clearly makes their teaching and research
assistantships  less competitive in the educational marketplace.

If you are a teaching or research assistant and receive both a stipend
and a tuition waiver/reduction and your universities is withholding taxes
from the stipend based upon the value of the stipend AND the tuition
waiver, please contact NAGPS via email as soon as possible.  You may
also  fax NAGPS a copy of your pay stub showing the tax withholding
so that we  may pursue the issue with the greatest amount of
information.  Email us  at nagps@netcom.com or fax us at (847)
256-8954.  (Case Western Reserve  University students do not need to
contact us - we are already aware of your situation and continue to
work with your GSS on that subject).

To learn more about this summer's tax legislation (which, at the end, was
extremely favorable to graduate students), please visit our web site at
http://www.nagps.org/NAGPS/ and link to our tuition tax web site.

Kevin Boyer
NAGPS Executive Director

--
*========================================================================*
| >>>> The National Association of Graduate - Professional Students
<<<< |
|           825 Green Bay Road, Suite 270    PHONE: 847-256-1562         |
|           Wilmette, IL 60091                FAX:  847-256-8954         |
|          Toll Free 1-888-88-NAGPS * Email to: NAGPS@NETCOM.COM
|
*------------------------------------------------------------------------*
|         NAGPS 12th National Conference - New Orleans, Louisiana
|
|                     October 30 - November 2, 1997                      |
+-----------------------------------+------------------------------------+
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nagps@netcom.com  |
*-----------------------------------+------------------------------------*
|  ####         WWW Site >  http://www.nagps.org/NAGPS/            ####  |
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