University Payroll Office
Income Taxes and Other Mandatory Payroll Deductions
Section G ~ Statement 5A
A. Purpose
The purpose of this Statement is to identify the mandatory deductions that the University Payroll Office is responsible for withholding from each University employee's pay and reporting and remitting to other authorities such as the Social Security Administration, the Internal Revenue Service, the North Carolina Department of Revenue, the North Carolina State Retirement System and the tax revenue departments of other states.
B. General Guidelines/Applicable Policies
The University Payroll Office is responsible for deducting or withholding from each University employee's pay, reporting, and remitting the following statutory deductions as described below:
1. Social Security contributions
a. OASDI Tax (Old Age, Survivors, and Disability Insurance)
b. HI Tax (Federal Hospital Insurance)
c. FED MED (Federal Medicare Insurance)
2. Retirement contributions
3. Federal income tax withholding
4. State income tax withholding
a. North Carolina
b. Other State income tax
Social Security Tax : All employees, except eligible student employees and nonresident aliens with certain visa clearance, are subject to applicable Social Security tax contributions. Statement 11 in this section contains instructions for Social Security tax exemption.
a. A student employee is eligible for exemption if the services performed are incidental to and for the purpose of pursuing a course of study at the University.
b. The student must be enrolled full-time and regularly attending classes; this applies to the regular year as well as summer school.
c. Nonresident aliens who have a F-1 or a J-1 visa clearance automatically are exempt.
d. Work-study earnings automatically are exempt.
Retirement Contributions: All employees holding position appointments equivalent to full-time permanent must hold membership in a retirement system. However, persons who previously have retired under the State system are allowed a six-month period before they must become active contributing members again. These provisions do not apply to temporary employment. At present, there are six (6) separate retirement systems at the University:
a. TSERS - Permanent full-time SPA (staff) employees, except law enforcement officers, are enrolled in the Teachers and State Employees Retirement System (TSERS). This program is managed by the State Treasurer's Office.
b. LEORS - Security Officers with the power of arrest may elect to join the Law Enforcement Officers' Benefit and Retirement Fund. If this election is not made, they are members of TSERS.
c. TIAA-CREF, Lincoln National, and VALIC - Full-time EPA employees with the rank of instructor or above may choose, within the first 30 days of employment, to participate in either the optional TIAA-CREF, Lincoln National, or Valic retirement program or the TSERS. Once an employee has selected a retirement system and has been enrolled, he or she may not change to another system. All other full-time EPA employees are enrolled in TSERS.
d. Federal Retirement System - Prior to January 1, 1984, Agricultural Extension Service employees could choose to participate in this system or a combination of Federal and State retirement systems. This option is not available to Agricultural Extension employees hired after January 1, 1984.
Federal, North Carolina, and Other State Income Tax Withholding: In accordance with Federal, North Carolina, and other State laws, the University Payroll Office withholds amounts for these taxes based on tax withholding schedules and the information submitted by each employee on an NC State University Withholding Allowance Certificate, Form W-4, NC-4; or other state's withholding allowance certificate. The University withholds other state's income tax ONLY when the employee is working in the other state. No voluntary out-of-state withholding is offered.
a. Forms W-4, NC-4, or applicable other state tax certificate for each new employee must be filed with the University Payroll Office. Instructions on how to complete these forms are shown at the end of this section.
b. Income taxes are not withheld on the employees' retirement contributions for the TSERS, TIAA, LEORS, Lincoln National, and Valic programs.
c. It is the employee's responsibility to keep their tax withholding status current. New Forms W-4, NC-4, or another applicable state tax certificate may be submitted as often as is necessary for this purpose. If an employee wishes to revise their tax withholding status(s), only the relevant form(s) needs to be completed.
C. Procedure
1. Work-study students and F-1 or J-1 visa holders automatically are exempt from the Social Security Program. The applicable social security tax will be withheld from all other employees unless the employee files Form PYRL02, NCSU Social Security Tax Exemption Certificate, with the University Payroll Office by the tenth calendar day of the month, to be effective in the current month. Please refer to Statement 11 in this section for instructions for completion of Form PYRL02.
2. The employee's eligibility to participate in a retirement system is indicated on the Personnel Action Form submitted on the employee.
3. Deductions for Federal and applicable State income taxes are based on the completed tax withholding certificates (Forms W-4, NC-4, or applicable other state tax certificate) for the following employee groups:
a. U.S. Citizens
b. Resident aliens and immigrants
c. Nonresident aliens who are residents of countries with which the U.S. does not have a relevant tax treaty.
4. Federal and State income taxes for nonresident alien employees from countries with which the U.S. has a relevant tax treaty are based on Form 8233. For tax status determination on nonresident alien employees, see Statement 10A in this section (Determination of Tax Status and Claiming Residence For Tax Withholding Purposes), Statement 12 for Visiting Scholars (Nonresident Alien Teachers/ Researchers) and Statement 13 for compensation to students while training (Nonresident Alien Students).
D. Forms
The NC State University Withholding Allowance Certificates, Forms W-4 and NC-4; and other applicable State tax certificates may be obtained from the University Payroll Office, Administrative Services Center.
Departments should keep on hand a supply of blank copies of both Forms W-4 and NC-4. For a copy of these forms, call 515-4350.
E. Instructions For Completion of Forms W-4 and NC-4 - NC State University Withholding Allowance Certificates
1. Employee Information - Enter the following: (a) Date to be effective (Format: MM/DD/YY); (b) Campus department to which employee is assigned; (c) Country of legal residence, if not United States; (d) employee status (permanent, temporary, or graduate student).
2. Withholding Information - Worksheets and further instructions for completion are on the back of Forms W-4 and NC-4.
ITEM and DESCRIPTION
1 Name, Home Address, City, State and Zip Code
To be completed by all employees. Format: First Name, Middle Initial, Last Name. If student, please use the home address, not the campus address.
2 Social Security Number
Enter employee's Social Security Number
Format: 999-99-9999.
3 Marital Status (Taxing Status)
Check appropriate box.
4 (W-4 Only) Last Name Differs From Social Security Card
Follow instructions on form W-4.
5 (W-4) Total Number of Allowances You Are Claiming
4 (NC-4) Complete using the worksheet and instructions on the back of Forms W-4 and NC-4.
6 (W-4) Additional Amount, If Any, You Want Deducted
5 (NC-4) This item is optional. The amount entered will be deducted EACH payroll. Amounts must be in whole dollars.
7 (W-4) Claiming Exemption from Withholding
6 (NC-4) Employees who claim exemption because they had no tax liability in the previous calendar year, and who anticipate no tax liability in the current year, are eligible to complete items 6, and 7. Exemption is granted on a calendar basis and must be renewed annually by submitting Forms W-4 and NC-4. Exemption cannot be claimed by an employee if they are claimed as a dependent on another person's tax return.
7 (NC-4) Indicate whether the employee is a full-time student.
8 (W-4) Employee's Signature and Date
8 (NC-4) The employee must sign on this line and enter the date of signature. Format: MM/DD/YY.
F. Instructions For Completion of Tax Withholding Allowance Certificates From Other States
Instructions will be handled on a case-by-case basis, pursuant to specific State involved.
Return to PAYROLL Table of Contents