New Employees
All new employees must complete Form W-4 during their first few days of work as part of the onboarding process. New employees who do not submit a completed Form W-4 before the processing of their first paycheck will be taxed at the rate of single with zero exemptions (withholding allowances). This tax rate will not be changed until the completed Form W-4 is received. Taxes withheld at the higher single/zero rate, due to Form W-4 not being submitted in a timely manner, will not be refunded to the employee by the the Office of Human Resources.
Federal Insurance Contributions Act (FICA)
Student FICA Tax Exemption
The University will follow the safe harbor rule outlined in Revenue Procedure 2005-11, which states that an individual whose enrollment status is at least that of half-time under-graduate, half-time graduate or a professional student, may qualify for the student FICA exception with respect to services performed for an institution of higher education. All students employed by and enrolled at the University and who meet these safe harbor guidelines will be treated as exempt from FICA taxes, while those student employees who do not will be subject to FICA taxes on their wages.
FICA Status of Foreign Nationals
Both the Internal Revenue Code (26 USC 3121 (b) (19)) and the Social Security Act (42 USC 410 (a) (19)) allow an exemption from Social Security/Medicare taxes to foreign national students, scholars, teachers, and researchers who have temporarily entered the country on F-1 and J-1 (among others) visas and who are classed as nonresident aliens under the residency rule.
This means that University students in F-1 or J-1 non-immigrant status who have been in the U.S. less than 5 calendar years are may considered Non-Resident Aliens (NRA) and are exempt from FICA taxes.
Foreign students who have been in the U.S. longer than 5 calendar years are deemed Resident Aliens and are liable for FICA taxes unless qualifying for the student FICA exemption under IRC section 3121(b)(10) previously discussed.
It is the responsibility of the hiring department and/or employee to notify the Office of Human Resources if they are in the US on a qualifying Visa in order to ensure they receive the proper tax treatment.
Over withheld Income Taxes
As an employer, the University is required to withhold income taxes from an employee’s pay according to the employee’s W-4 form on record at the time of payment. It is the employee’s responsibility to complete these tax forms and to do so correctly. If an employee fails to complete the forms, and if income taxes are over withheld as a result, the Office of Human Resources will not refund any of the taxes withheld. If eligible, the employee can obtain a refund of any over withheld income taxes when filing a personal income tax return for that year.
Changing Tax Information
If an employee wants to change their current tax withholding rate, a new W-4 Form must be completed in Employee Self-Service (ESS). Changes may be made at any time throughout the year.
A W-4 form remains in effect until the employee submits a new form. When an employee submits a W-4 form that replaces an existing form, the Office of Human Resources must implement the withholding change no later than 30 days from the date the form is received. The withholding change cannot be implemented for a payroll period that ends prior to receipt of the new form.
Effective 1/1/2020, the IRS has released an updated version of Form W-4 to reflect federal tax law changes that took place in 2018. You can find helpful information regarding this updated form on the IRS website under Frequently Asked Questions on the 2020 W-4. We also urge you to perform a “paycheck checkup” using the IRS Tax Withholding Estimator to see if you need to make adjustments to your current withholding.
Exemption from Withholding
Employees can claim exempt from income tax withholding, if they meet IRS guidelines. Information on claiming exemption from withholding can be found on the requisite tax form. By claiming exempt status, no federal taxes will be withheld.
Mandatory Renewal of Exemption from Withholding
The exempt status expires at the end of the every calendar year. Each calendar year, employees must complete new tax form to claim exempt status.
If an employee’s exempt status is not renewed annually, the Uniiversity must begin withholding income taxes during the next pay period at the default maximum withholding amount, single with zero exemptions. No refunds will be given by the Office of Human Resources due to an employee’s failure to update tax documents timely.
