Payroll Deductions
Payroll taxation is highly regulated and in the University environment includes a number of different forms for a variety of employee scenarios.
Mandatory Tax Withholding
Social Security and Medicare taxes are payroll deductions mandated by the Federal Insurance Contributions Act (FICA). The combined tax rate is 7.65 percent of total gross income, consisting of 6.20 percent for Social Security and 1.45 percent for Medicare. There are maximum earnings limits established each year as taxable maximums for Social Security. See annual updates.
Exception to Mandatory Withholding: Students at the University who are enrolled in a half-time or more student schedule may be exempt from FICA withholdings. Half-time schedules are equivalent to 5 credits minimum per term for graduate students and 6 credits minimum per term for undergraduate students. It is important to know that if at any time enrollment drops below that level or a student is working in a non-student position, FICA withholding will be required.
Federal Income Tax
Federal Income tax is withheld according to a Federal Tax Table titled "Publication 15—Circular E, Employer's Tax Guide." The Federal Tax Tables display figures that reflect a combined total for income tax plus Social Security and Medicare taxes. The PSU payroll system utilizes figures listed under the annualized formula to calculate withholding.
Oregon Income Tax
It is recommended that employees reference "Things You Need to Know" in these documents to gain relevant information for income and needs. The PSU payroll system utilizes the monthly tax tables to calculate withholding.
Statewide Transit Tax
Statewide transit tax is implemented by the State of Oregon. For further information about the tax, visit the Oregon Department of Revenue's statewide transit tax page. Oregon employers are required to withhold this tax from all employees.
Oregon Paid Family Medical Leave
Filling Out The Form W-4
The Form W-4 is used by PSU to determine the correct federal and Oregon state income tax to withhold from pay. A completed Forms W-4 is required for each employee who receives pay from the University according to the Internal Revenue laws of the United States. The information requested under "Employee's Withholding Allowance Certificate" must be provided to the University.
Different Requirements Depending on Employee Status
US Citizens and employees with Resident Alien or Substantial Presence Status will find detailed guidance on Form W-4 on the factors to consider when completing the Employee's Withholding Allowance Certificate, including when and if individuals may claim exemption from withholding.
The Substantial Presence status is based upon a test as outlined below that reflects each person's individual situation rather than in accordance with Non-Resident Alien restrictions outlined below. If an employee meets the test for Substantial Presence, they will need to review procedures for filing a tax return as well—Refer to IRS Publication 17—Your Federal Income Tax. Additional information regarding the test to determine Substantial Presence is located in the IRS Publication 519—US Tax Guide for Aliens.
Non-Resident Alien (NRA) employees at the University must adhere to the following restrictions when filling out the Form W-4. Failure to comply with these restrictions can result in Internal Revenue Service penalties and fines. Detailed instructions are found under the IRS Publication 519—US Tax Guide for Aliens.
Non-Resident Alien Restrictions for completing the Form W-4:
- Check "Single" regardless of marital status.
- Claim "1" allowance on line 5 (Oregon State form only).
- Non-Resident Alien employees NOT claim "Exempt".
- Non-Resident Alien employees must write "Non-Resident Alien" or "NRA" on the form.
Employees who are a resident of Canada, Mexico, or South Korea may claim more than one allowance. Students from India may claim an allowance for an accompanying spouse and dependent children who are US citizens or residents. US Nationals of American Samoa and the Northern Mariana Islands may also claim allowances for dependents.
Oregon Form W-4
Additionally, Oregon has its own withholding form: Oregon Withholding Statement and Exemption Certificate OR-W-4. Employees can find the Oregon department of revenue tax calculator here. Employees need to complete both forms. Employees who miss completing the Oregon withholding form you will be taxed at the highest rate of 8%.
Changing Withholdings*
The Form W-4 may be updated by completing a new form whenever there is a change in individual tax situation and the employee would like withholdings to reflect this. Changes may include events such as marriage, divorce, adding a new dependent, increase or decrease in FTE, and so on. If an employee submits a Form W-4 reflecting an exemption from withholding, they must complete a new request for this exemption by February 10th of each year, as the exemption expires each year in February.
If an employee wishes to withhold additional amounts for Federal and/or State, they may do so by entering the additional dollar amount in the appropriate field for each form; Federal and/or State.
Employees may also refer to the IRS Federal Tax Calculator and the Oregon Department of Revenue Tax Calculator for more guidance on tax withholding.
*Legal and/or tax documents cannot be backdated or processed retroactively
Understanding Pay Stub Deductions
The following is a list of deduction codes that may appear on an employee's pay stub. To view payroll deductions, login to Banweb. Click here to view a sample Pay Stub.