Harvard recently notified HUCTW leaders that in order to ensure compliance with current IRS policies, the University will begin withholding tax on Tuition Assistance Program (TAP) benefits for classes that meet all three of the following three criteria:

• If the classes are taken for graduate credit (courses taken for undergraduate credit or for no credit are not taxable); and
• If classes do not meet the IRS standard of job-relatedness; and
• If the total tuition benefit used for such courses during the calendar year exceeds $5,250 (only amounts over $5,250 are taxable).

The change will primarily affect your tax bill for courses taken at Harvard using the Tuition Assistance Program (TAP). It should not affect tax bill for courses taken outside of Harvard using the Tuition Reimbursement Program (TRP), unless you are using both programs (TAP & TRP) in the same year. If you are unfamiliar with these programs you can learn more here.

HUCTW is very concerned about the change. We recognize how important Harvard’s Tuition Assistance Program is to members and we are working hard to better understand the new tax burden, and whether some or all of that burden can be mitigated or avoided. Since “job-relatedness” will be a key factor in determining whether members will owe tax on graduate level classes, we are talking to Harvard about how the term “job-related” should be interpreted. You can find some initial guidelines we have drafted on how to a apply job-relatedness standard to your class here. We have also begun working with Harvard administrators to identify potential longer-term solutions.

As a part of the message to members, the University provided a question and answer sheet about the tax-withholding changes. All members who are using TAP or plan to use TAP should read this Q&A document carefully. The Q&A also describes a financial assistance program that will help members with eligible tax costs, but this assistance is a temporary measure that only assists members over the next couple of years. You can find the form to apply for this program (Transitional TAP Fund) on under the Transitional TAP Fund (TTF) link on the Benenfit Strategies website: https://www.benstrat.com/harvard/.

From our research, it appears other universities who offer a comparable tuition benefit to their staff either limit tuition benefits to $5250 or require tax withholding on non job-related graduate level courses that surpass the $5250 per year limit, so this interpretation of the IRS policy seems to be the norm. Nonetheless, it is a big adjustment to a policy that we have had in place for many years and we would like to find ways to maintain as much of the cost savings that members have become accustomed to as possible.

The Benefits Office recently sent a message to members who have used TAP in the last two years to notify them of this change. That notification is pasted below our message.

We will be in touch as soon as we have more substantive information to share. In the meantime, please reach out to us if you have questions, concerns, or ideas about this change. You can write us at this address, huctw.info@huctw.org, or write to our Education Fund coordinators at huctw.edfund@huctw.org.

TAP forms and instructions can be found on Benefit Strategies website: https://www.benstrat.com/harvard/