How are the Federal Withholding Taxes computed on the Tuition Benefit Payment?
Tuition Benefit payments are considered wages, and as such are subject to federal withholding taxes. Amounts paid are reported at year-end on your W-2 along with other earned income. The taxes are computed using the IRS Monthly Table for Percentage Method. Tuition Assistance amounts will be taxed separately from other income received in the same pay period and will be based on the withholding status claimed on IRS Form W-4. Per IRS regulations, taxes for nonresident aliens are computed using an additional $221 added to taxable gross. The tax tables can be found on the UT Payroll Services web site at http://www.utexas.edu/payroll/withholdingtable2008.html.
