HR-222 Payroll Deductions

Summary

The University withholds deductions from payroll earnings dependent on the obligation or option of the employee, university policy, or as required by law. This policy provides information on various payroll deductions, the order of deductions, and processes to request new deductions.

If any part of this policy does not reflect the Collected Rules and Regulations (CRR), the provisions of the CRR will govern.

HR Policy Provisions

Tax Withholdings Information
1. Federal, state, and municipal earnings taxes and social security and Medicare taxes are automatically deducted from each payroll earnings check, as required by law. These deductions are based on applicable taxable income. Employees are responsible for ensuring accurate tax withholding elections, work addresses, and home addresses. Failure to do so will result in inaccurate tax withholdings.
2. FICA taxes (Social Security and Medicare) are required unless the employee qualifies for an exemption.
  1. Non-Resident FICA exemption applies to employees who:
    
    a. Are a nonresident taxpayer;
    
    b. Are on an F-1, J-1, M-1, or Q visa; and
    
    c. Are performing services related to the purpose of entry into the United States.
  2. Student Employment FICA exemption requirements are applied in accordance with 26 CFR Part 31 and IRS Revenue Procedure 2005-11. The following summarizes key requirements, but the terms of 26 CFR Part 31 and IRS Revenue Procedure 2005-11 control in the event of any ambiguity:
    a. Must be enrolled as a ��ҹӰԺ student at least half-time or deemed to be half-time under standards stated in IRS Revenue Procedure 2005-11;
    - The term "half-time undergraduate student" has the same meaning as the term in the Department of Education regulations. For graduate and professional students, Department of Education regulations allow the University to establish what constitutes half-time status. A student's half-time status is determined at the end of the drop-add period.
    b. Must regularly attend classes; and
    
    c. Employment with the ��ҹӰԺ must be incident to and for the purpose of pursuing a course of study.
    
    d. Students are not eligible for the exemption if they:
    
    1. have a normal work schedule of 40 or more hours per week or are otherwise considered a full-time employee under University policies;
    
    2. are a “professional employee,” meaning an employee whose work requires knowledge of an advanced type in a field of science or learning; requires the consistent exercise of discretion and judgment; and predominantly intellectual and varied in character; or
    
    3. a benefit eligible employee as defined in HR-101.
    
    e. The student FICA exception does not apply to students who are not enrolled in classes during school breaks of more than 5 weeks (including summer breaks of more than 5 weeks).
Order of Payroll Deductions - Payroll deductions will occur in the following order unless otherwise required.
1. Tax withholdings, including federal, state, FICA, etc.;
2. Uncollected FICA and Medicare taxes;
3. Garnishments as required by court order or other mandates;
4. Pension Plan Retirement Contributions (See CRR 530.010);
5. Optional University deductions, including but not limited to:
  1. Insurance premiums such as medical, dental, vision, life, etc.
  2. Flexible spending account (FSA) and healthy savings account (HSA) contributions
  3. Parking permit deductions
  4. Defined contribution retirement plan deductions
    
    1. Irrevocable retirement plan contributions, 401(a) and 403(b); and
    
    2. voluntary retirement plans, 457(b) and 403(b).
6. Other amounts owed to the University (e.g., repayments, parking tickets, etc.); and
7. Other voluntary deductions (e.g., union dues, charitable contributions, etc.).
Other Information
1. Employees are responsible for ensuring accurate and up-to-date tax withholding elections, work addresses, and home addresses. Failure to do so could result in inaccurate tax withholdings.
2. Employees requesting to add, change, or stop voluntary deductions must contact the relevant department directly.
3. University departments proposing payroll deductions may submit their request to University Payroll Shared Services or Hospital Payroll for review. Only under unusual circumstances will deductions impacting less than 20% of the University System population be considered. Requests must include:
  1. specific details regarding the purpose of the deduction;
  2. the number of people anticipated to enroll;
  3. the account code to credit for collected funds and
  4. the name of the person to be held responsible for collected funds.
4. The UM System Central Payroll Office maintains a complete list of authorized deductions and a schedule of deduction dates. Please visit the UM System Central Payroll website for questions about payroll deductions.

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Summary

HR Policy Provisions

See Also