Payroll Tax Information
Federal and State Withholding: W-4 and NC-4 Forms
Employees are subject to both federal and state income tax withholding. Each tax is withheld separately and is based on the employee’s income and withholding allowances. All employees are required to complete both a W-4 Employee's Withholding Allowance Certificate (federal) and an NC-4 Employee's Withholding Allowance Certificate (state). If these forms are not on file with the University Payroll Office at the time payroll is processed, the required withholding will default to single with no exemptions.
Employees must file updated W-4 and NC-4 forms if there have been any changes to their filing status, exemption allowances, or exempt status since their last submission.
While the Payroll Staff can assist in identifying the necessary sections to complete on the W-4 and NC-4 forms, we are unable to provide tax advice. For specific guidance regarding your tax situation, please consult a professional tax advisor. Additional information on federal tax withholding can be found in Federal Publication 505 and the IRS Online Tax Withholding Estimator calculator.
Tax exempt elections expire in February of the following year and must be renewed each new calendar year.
FICA and Medicare Taxes
The Federal Insurance Contributions Act (FICA) funds the system for old-age, survivors, disability, and hospital insurance. FICA taxes cover Social Security (OASDI) and Medicare. OASDI is withheld at 6.2% from both the employee and employer, up to the wage base limit, while Medicare is withheld at 1.45% for both the employee and employer, with no cap on taxable wages for Medicare.
|
Student Classification |
Semester Term |
Half Time or Above |
FICA status |
|
Undergraduate |
Fall/Spring |
6 Credit Hours or Above |
Exempt |
|
Undergraduate |
Summer |
3 Credit Hours or Above |
Exempt |
|
Graduate |
Fall/Spring |
4 Credit Hours or Above |
Exempt |
|
Graduate |
Summer |
3 Credit Hours or Above |
Exempt |
Student employees that do not meet the minimum credit hours for FICA exemption must submit a completed Student FICA Exemption Form to the University Payroll Office at the start of each non-qualifying academic term.
- F-1 and J-1 students who have been in the U.S. for less than five calendar years are considered nonresident aliens for tax purposes and are exempt from FICA taxes. After five years, they are considered resident aliens and are subject to FICA taxes unless they qualify for the student exemption described above.
- F-1 and J-1 scholars, teachers, professors, trainees, and researchers are exempt from FICA taxes for the first two years in the U.S. After two years, they are subject to FICA taxes. Therefore, payroll will begin withholding FICA taxes on January 1 of the third calendar year in the U.S.
- Individuals working in both professional and student positions must pay FICA taxes on their professional position. Professional roles usually come with benefits packages, disqualifying them from the student FICA exemption. However, nonresident aliens in F-1 or J-1 status remain exempt from FICA taxes until they meet the SPT.
- All other non-residents, including H-1B, J-2, and TN visa-holders, are subject to FICA taxes from their first day of employment.
- Postdoctoral, fellows, medical residents, and interns are not eligible for the student FICA exemption.
Those with normal work schedule of 40 hours a week
Professional employees
Defined as employees whose work:
- Requires advanced knowledge in a field of science or learning
- Requires the consistent exercise of discretion and judgment
- Is predominantly intellectual and varied in character
Career employees
Defined as those eligible for:
- Retirement plans
- Vacation, sick leave, and paid holidays
- Tuition benefits
- Life insurance, dependent care, and other considerations
The IRS may disregard the FICA exemption if it determines the exemption was improperly applied to manipulate the employer-employee relationship to avoid paying FICA taxes.
Examples of inappropriate use of the FICA exemption include:- A research lab worker who was a career employee but was converted to a non-career status and enrolled in a certificate program to qualify for the exemption.
- An employee working full-time in a non-student position who enrolls in coursework but continues to work full-time in the same job. It would be incorrect to claim that the work has become educational simply because the employee is taking courses.
