Tax Tips for Higher Education

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Student FICA Exception

Student FICA Exception

ISSUE:

Services in the employ of certain higher education institutions, performed by a student, qualify for the exception from FICA tax.

SITUATION:

Marathon Bible College (MBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and section 170(b)(1)(A)(ii).  MBC files Form 990 and Form 990-T annually.

The Accounting team at MBC emailed us to ask about the “Student FICA Exception.”  We tell them that services performed for MBC by “students” (one who is a half-time undergrad or graduate student) will generally not be subject to FICA tax.  And, there is a recent IRS “issue snapshot” that covers this issue.

We also told them that, if the IRS audits their records in this area, they would review your documentation that shows the students qualify for the FICA exception. The IRS would check to see that this information is sufficient to show that the student employee had the status of a student and the portion of the year that this status was held. In addition, they would need to know when the student worked during the year.

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Tax Reform: President’s House on Campus?

Tax Reform: President’s House on Campus?

ISSUE: H.R. 1 – the House’s version of tax reform - has some negative issues for higher education.  One of these is a limitation on “employer-provided housing.”     SITUATION: Saltwater Christian College (SCC) is a private college exempt under Internal Revenue Code...

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Happy Thanksgiving!

Happy Thanksgiving!

Please know that we are Thankful for each and every one of you.  We pray that you will have a blessed Thanksgiving with family and friends.  We are grateful for the work you do to bless those around you and further the Kingdom of Jesus.

Psalm 118:28-29

You are my God, and I will praise you;
    you are my God, and I will exalt you.

Give thanks to the Lord, for he is good;
    his love endures forever.

HAPPY THANKSGIVING from Tax Tips!

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Holiday Gift Cards for Employees

Holiday Gift Cards for Employees

ISSUE:

Although actual turkeys and hams given to employees are generally non-taxable, holiday gift cards are another story.

SITUATION:

Idaho Bible College & Seminary (IBCS) is a private college exempt under Internal Revenue Code section 501(c)(3) and section 170(b)(1)(A)(i).  They are not required to file Form 990 annually.

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New Tax Reform and Educational Assistance

New Tax Reform and Educational Assistance

ISSUE:

The new tax reform bill – H.R. 1 – has some negative issues for higher education.  Chief among them are the repeal of tuition and education “assistance” programs.

SITUATION:

Troas Bible College (TBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and section 170(b)(1)(A)(ii).  The past two “Tax Tips” have covered TBC’s “tuition assistance program” under Internal Revenue Code section 117(d) and the potential benefits of also having an “educational assistance” plan under I.R.C. section 127 plan.

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