Payroll
Policy
FIACCT 11-01_00 Payroll – Employee Income Tax Withholding
Effective: October 1, 1990
Revised: July 1, 2007
Reviewed: August 1, 2009
Purpose
This policy defines the policies and procedures for withholding employee income taxes and submitting the Employee Withholding Allowance Certificate, form W-4.
Policy
A. The Division of Finance Payroll section will withhold employee payroll-related taxes on United States citizens and nonresident aliens in accordance with the rules published by the Internal Revenue Service (IRS) and by state and local taxing authorities.
B. Each employee must have a valid Employee’s Withholding Allowance Certificate; Form W-4, on file with the Division of Finance Payroll section.
C. Departments will notify their employees of the withholding rules and review each Employee’s Withholding Allowance Certificate, form W-4, for validity before sending it to the Division of Finance Payroll section. It must meet the following criteria or it will not be accepted.
The form must be unaltered
Name and Social Security Number (SSN) must match the Social Security card
The form must be signed by the employee and dated.
D. The Division of Finance Payroll section will enter changes to employee withholding information on the Payroll system. Changes to employee tax withholding will be allowed for the following reasons:
Change in number of withholding allowances
Change in marital status
Change of name with the Social Security Administration
Changes made to employee withholding allowances will be made on the Payroll system no later than the third (3rd) payday following receipt of the Employee’s Withholding Allowance Certificate, form W-4, at the Division of Finance Payroll section.
E. Current employees may enter W-4 changes on the Internet Employee Self Service application providing they:
Have a state e-mail address
Have a LAN password
Have been set up by their department with access to ESS
F. New employees or rehired employees must file an Employee’s Withholding Allowance Certificate, form W-4. Departments should enter this information on the HR Enterprise system. The original form must be submitted to the Division of Finance Payroll section with a copy of the employee’s Social Security card.
G. The department will set up a new employee as single with zero allowances if he/she refuses to complete and sign an Employee’s Withholding Allowance Certificate, form W-4. The department will submit an Employee’s Withholding Allowance Certificate; Form W-4, to the Division of Finance Payroll section indicating the employee has refused to complete it.
H. Employees filing as exempt from withholding according to IRS rules must submit a new, original Employee’s Withholding Allowance Certificate, Form W-4, by February 15 of each calendar year. Failure to do so will result in employee income taxes being withheld as if the employee were single with zero (0) allowances.
I. The Division of Finance Payroll Section will provide agencies with information on current withholding rules to
encourage employee understanding and compliance with state and IRS withholding regulations.
J. Additional state tax may be withheld if the employee submits a completed Authorization For Voluntary
Additional State Income Tax Withholding; Form FI 41.
K. The employee is responsible to verify that requested changes and/or additional withholding have been made on the payroll check. Any discrepancies should be brought to the immediate attention of the department payroll/personnel staff.
Background
The State, as an employer, is required by law to withhold federal and state taxes from employees’ pay in accordance with established rules and regulations.
The department may obtain Employee’s Withholding Allowance Certificate – Form W-4, available from the IRS website www.irs.gov or from their department payroll/personnel staff.
Procedures
Responsibility
Action
Employee
- Use the worksheet on the Employee’s Withholding Allowance Certificate, form W-4, to calculate the number of allowances to be claimed.
- Submit a complete and valid Employee’s Withholding Allowance Certificate, form W-4, to the department payroll/personnel staff.
OR Log onto the Internet Employee Self Service and use the W-4 application to make changes to marital status and/or number of allowances.
NOTE: As of 1989, the IRS may charge penalties if income tax due for the year exceeds the amount of tax withheld by $500.
Department
Payroll/Personnel
Staff
- Review the Employee’s Withholding Allowance Certificate, form W-4, for valid information. Indicate on the back of the form:
NH for a new hire
CH for change of information
RH for a rehire - Submit valid forms to the Division of Finance Payroll Section.
- Return invalid forms to the employee with reason(s) for refusal
- For a new employee or rehired employee, enter the valid information from the Employee’s Withholding Allowance Certificate, form W-4, on the HR Enterprise System. Detach the worksheet. Submit the Employee’s Withholding Allowance Certificate, form W-4, with a copy of the employee’s Social Security card taped to the back of the W-4 form to the Division of Finance Payroll Section.
- For an existing employee, detach the worksheet; then submit the Employee’s Withholding Allowance Certificate, form W-4, to the Division of Finance Payroll Section for data entry.
6. Prevent underwithholding of income taxes by requiring nonresident aliens to complete the Employee’s Withholding Allowance Certificate, form W-4, using the following guidelines:
Do not claim exemption from income tax withholding.
Request withholding as if the employee is single, regardless of his marital status.
Claim only one allowance (not applicable for residents of Canada, Mexico, Japan, or Korea).
NOTE: At the end of this policy section is a reference which may be photocopied and given to the employee.
Division of Finance
- Verify that an original Employee’s Withholding Allowance Certificate, form W-4, is received for every new employee.
- Enter W-4 information on the Payroll System for:
All changes for existing employees - Maintain a file containing all Employees’ Withholding Allowance Certificates, and Form W-4.
Why Must I Complete a Form W-4
♦ The IRS Form W-4 is used to determine the amount of income tax withheld from your pay.
♦ If you fail to submit a valid Form W-4, we are required by the IRS to withhold tax from your pay at the highest rate. (Single and claiming no withholding allowances)
What Makes a Form W-4 Valid?
♦ Your name and Social Security Number appear exactly as they are on your Social Security card. Newly hired employees should show a Social Security card. A copy of the card will be taped to the back of their W-4 as proof of verification.
♦ The form is unaltered. Any unauthorized change or addition to the W-4 form makes it invalid.
♦ The form is signed.
♦ No indication of false information.
♦ If we have a valid W-4 on file and you submit an invalid form, we will withhold according to the most recent valid form on file.
How Can I Be Sure the Correct Amount of Tax Is Withheld?
♦ Follow the instructions attached to the Form W-4 carefully.
♦ Refer to IRS Publication 919 to compare the amount of tax you are having withheld to your estimated annual tax.
♦ Consult with your department’s payroll/personnel staff to get an estimate of the amount of tax that will be withheld based on your estimated taxable earnings and number of allowances claimed. Although such estimates may be helpful, they must NOT be considered or relied upon as tax advice.
♦ Contact your Tax Accountant or Attorney for tax advice.
It is in your best interest to complete the W-4 form properly. Remember, IRS may charge a penalty for under payment of withheld taxes if your tax liability is $500 greater than the amount of tax you have withheld.
When Should I Submit a W-4?
♦ When you are first hired. All new hires must submit a W-4.
♦ When your name as it appears on your Social Security card changes.
♦ When your marital status changes.
♦ When your number of withholding allowances changes.
♦ When you claim exempt from withholding. Must be submitted by February 15 of each calendar year.
Changing W-4 information for any other reason is not proper.
In compliance with IRS rules we will begin withholding according to the new W-4 no later than the third payday after the date the form is received in the state’s central payroll office.
What About State Tax Withholding?
♦ Information on the Form W-4 is also used to withhold state taxes.
♦ More state tax may be withheld by filing an Authorization For Voluntary Additional State Income Tax Withholding Form (FI 41)