Thank you for the question. So this is our starting point: Qualified Tuition Reduction
This IRS resource starts here:
Free or reduced tuition provided by eligible educational institutions to its employees may be excludable from gross income as a qualified tuition reduction. Whether a tuition reduction is a “qualified” tuition reduction and excludable from income depends on whether it is for education below or at the graduate level and whether the tuition reduction represents payment for services. (Emphasis Added)
Based upon your fact pattern you are a current employee, but you are working on a graduate degree.
Section 117 (d) of the Internal Revenue Code allows employees of certain educational institutions, including nonprofit universities and colleges, to exclude from taxable income qualified undergraduate tuition reductions they, or their dependents, receive from their employer.
A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met.
If you do not meet the test above then you should adjust for the income that most likely will be paid on a 1099-MISC. You would add this income in Part 4 (a).
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