W-4 Allowances

The W-4 allowances you claim determine the federal and state taxes that are withheld from your gross pay each period. For each withholding allowance you claim, you reduce the amount of income tax withheld from your wages. All new employees are required to complete a form W-4. If one is not provided, IRS requires taxes to be withheld at the rate of "Single" marital status and "zero" allowances until a form W-4 is completed.

IRS has basic instructions for completing a W-4.

Personal Allowances

To determine the correct number of allowances you should claim on form W-4, complete the Personal Withholding Allowances Calculator provided by IRS.

Federal Tax Calculation

Federal income taxes are generally withheld from pay using the IRS percentage method of withholding. See the appropriate biweekly percentage rate table below.

Federal Tax Calculation Table

Exempt W-4

If you claim exemption from withholding by filing an exempt W-4, be aware that your exempt status expires annually. A new form W-4 MUST be filed by February 15th of the following year to continue the exemption from tax. To determine if you're eligible to claim exempt on your W-4, see the Exemption from Withholding section of IRS Publication 505.

You can view and update your W-4 any time at Employee Self-Service.

If you don't have access to the Internet to make your W-4 changes online, you can submit a paper W-4 Form (pdf) to Payroll Services at 1300 S. 2nd Street, Suite 545, Minneapolis, MN 55454.

Supplemental Tax Withholding

Although income taxes on wages are generally withheld using IRS percentage method and the State rate formulas or tables, some taxes are withheld at "supplemental" rates. Those rates may be calculated at either the percentage method or flat rate method, depending upon how the supplemental wages are paid—combined with regular wages, or paid out separately.

IRS defines supplemental wages as compensation paid in addition to the employee's regular wages that includes, but is not limited to, severance or dismissal pay, vacation pay, back pay, bonuses, moving expenses, overtime, taxable fringe benefits, and commissions. Currently, the IRS flat supplemental rate is 25 percent. That rate is subject to change annually with the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001.

The University will apply the supplemental rate of withholding to the following supplemental wages:

• Athletic Contract Supplement
• Bonus/Commission
• Late Pay
• Layoff, Non-Renewal
• Moving Expenses Taxable Benefit
• Non-Qualified Deferred Compensation
• Previous Pay
• Retirement Contribution
• Settlement Awards
• Special Payment (as defined by the Office of Tax Reporting and Compliance)
• Terminal Agreement
• Vacation Payout

Earned Income Credit

Earned Income Credit (EIC) is a refundable IRS tax credit for certain workers. To determine if you're eligible to receive a federal tax refund due to EIC, read IRS Notice 797 (pdf).