Skip Navigation

University of Nebraska Policies

Payroll Tax Withholding
REVISED OCTOBER, 2008

EMPLOYEE WITHHOLDING ALLOWANCE CERTIFICATE W-4
The University of Nebraska is required to withhold federal and state taxes from certain employee wages, using pre-defined IRS and Nebraska State Income Tax withholding tables.

Each employee must complete a W-4 form when beginning work at UNL. If an employee does not complete the W-4 form, federal and state taxes will be withheld using the single status and zero withholding allowances. UNL will not refund any taxes that were withheld due to an employee's neglect to complete the W-4 form. To make changes to your W-4 allowances contact your department Payroll Clerk or the UNL City Campus Payroll Office.

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

IRS Personal Allowances Worksheet

A W-4 remains in effect until an employee submits a new one except in the case where an employee claimed to be exempt. An exempt employee must complete a new W-4 each calendar year. See further details regarding exempt status below.

If an employee is to receive an award payment or additional pay i.e. overload pay, summer research, summer teaching it is the responsibility of the department to notify the employee that he/she may want to change his/her W-4 withholding status in order to prevent over taxation due to the additional income. An employee may request the Payroll Office to provide him/her with a tax projection analysis worksheet based on the various exemptions.


EXEMPTION FROM INCOME TAX WITHHOLDING
The W-4 for an employee who has indicated that he/she is exempt from withholding expires on February 15th of each calendar year. The UNL Payroll Office will send a letter of notification in late January of each calendar year to employees who have completed their W-4's indicating that they are exempt from withholding. If the employee qualifies and wishes to continue being exempt from federal income tax withholding, the employee must complete a new W-4 and submit it the Payroll Office by the deadline indicated in the letter. To determine if you are eligible to claim exempt on your W-4, see the Exemption from Withholding section of IRS Publication 515.

NEBRASKA STATE INCOME TAX

Nebraska follows federal rules for determining the number of allowances to claim for NE state tax withholding purposes, unless an alternative withholding percentage is required by state law.

Nebraska Dept of Revenue State Income Tax


NONRESIDENT ALIENS
In general, if you pay wages to nonresident aliens, you must withhold income tax (unless exempted by regulations), social security and Medicare taxes as you would for a U. S. citizen. However, income tax withholding from the wages of nonresident aliens is subject to special rules. Please see instruction for completing the NRA W-4 in Sapphire at Business Forms / UNL Business Forms / Human Resources / Form W-4 Form for NRA.

Note: Nonresident alien students from India are not subject to the additional income tax withholding requirement.

CLAIMING TAX TREATY BENEFITS

ELIGIBILITY:

In order for foreign nonresident alien students and scholars to be exempt from federal and state income tax withholding the non-resident alien must meet certain criteria. First, there must be a treaty provision that exists between the United States and the nonresident alien’s country of residence. Second, the individual must meet the treaty eligibility requirements for the particular treaty article being claimed. Third, the nonresident alien must have either a social security number or and Individual Taxpayer Identification Number (ITIN) to be able to receive treaty benefits. Fourth, the correct tax treaty exemption forms must be completed supported by all required documentation.

FORMS:

The type of form used to claim treaty benefits depends upon the type of income being paid under the treaty provision, and whether the foreign individual is a nonresident alien for resident alien for tax purposes.

 

  • For personal services income

     

    • Use form 8233 and the Tax Treaty Statement if the individual is a student, a teacher or researcher. Form 8233 and the Tax Treaty Statement expires at the end of each calendar year. The UNL Payroll Office will notify the nonresident alien that he/she must complete a new form each year. The nonresident alien is responsible for completing the form and returning it to the Payroll Office prior to the deadline indicated in the letter. If the nonresident fails to complete the proper forms each years, he/she will not be given treaty benefits until such time that the new treaty forms are completed.
     
    • Use form W-9 and Attachment to form W-9 if the foreign individual is a resident alien for tax purposes. This form is valid indefinitely until the individual’s circumstances change where the information reported is no longer valid, i.e. the resident alien becomes a “green card” holder or citizen, or treaty time limits run out.
      Use form W-8BEN for scholarship/fellowship grants and royalty income if the foreign individual is a nonresident alien for tax purposes. This form is valid as long as the individual is eligible for treaty benefits and the individual receives a tax reportable payment at least once per year.

     

    • Use form W-9 and Attachment to form W-9 if the individual is the foreign individual is a resident alien for tax purposes. This form is valid indefinitely until the individual’s circumstances change where the information reported is no longer valid. ie. resident alien becomes a “green card” holder, a citizen or treaty time limits run out.

NONRESIDENT & RESIDENT ALIEN SOCIAL SECURITY NUMBER/ TAXPAYER IDENTIFICATION NUMBER (TIN) REQUIREMENT

 

Effective for payments made on or after January 1, 2001, any tax treaty claim made on forms 8233 or W-8BEN which do not contain a social security number or a permanent U. S. Taxpayer Identification number cannot be accepted.

A permanent TIN is:

  • Social Security Number (SSN) – Used for employees, independent contractor and scholarship/fellowship recipients

 

  • Individual Taxpayer Identification Number (ITIN) – Used for independent contractor and some scholarship/fellowship recipients

Sapphire – Tax Treaty Table and Tax Treaty Statements

Sapphire – 8233 Form

Sapphire – W-9 Form

Sapphire - W-8BEN Form

IRS Publication 901

IRS Tax Treaty Information


W-2 TAX FORMS
By January 31st of each calendar year, UNL is required to report to the Internal Revenue Service (IRS) and the State of Nebraska Department of Revenue on a W-2 form for each employee the taxable wages and related compensation, income taxes withheld and certain payroll deduction for the previous calendar year. Wages are always reported for the year in which they are paid.

All University of Nebraska – City Campus W-2's will be mailed to the employee’s permanent home address in the University SAP payroll system prior to January 31st of each calendar year.

It is the employee’s responsibility to notify his/her payroll clerk of any address change. If an employee has already separated from the University, it is his/her responsibility to notify the Payroll Office of his/her permanent mailing address.

If an employee does not receive his/her W-2 for wages earned in the previous calendar year by February 10 of each calendar year, he/she should contact the UNL City Campus Payroll Office to determine if the W-2 had been returned to the Payroll Office by the U. S. Postal Service. If an employee did not receive his/her W-2 and it was not returned by the U.S. Postal Service, he/she may request a duplicate by completing a request for duplicate and providing proof of identification via a picture ID.

SOCIAL SECURITY

All employees of the University of Nebraska are subject to social security tax withholding, based on the earnings levels and tax rates established by the IRS. Two categories of employees may be exempt from social security tax withholding, depending on the specific facts and circumstances relating to their employment as follows:

  • Undergraduate and graduate students who meet the tests defined in IRS revenue procedure 98-16 and UNL Policy for being enrolled and regularly attending classes during the academic semester in which they are employed will be exempt from FICA withholding on University wages. The tem “student” refers to undergraduate or graduate

 

  • Nonresident aliens who hold F-1, J-1, M-1 or Q-1 visas and who are performing employment that is consistent with the provisions of their visa status; and do not meet the substantial presence test (SPT) which is 5 years for students and 2 years for teacher/researcher.

In accordance with federal tax laws, the University of Nebraska shall grant an exemption from social security (FICA) tax withholding on wages paid to a student during an academic semester or summer session in which the student is enrolled and regularly attending classes. A student will be deemed to be enrolled and regularly attending classes if he/she is enrolled at least half-time, i.e. 50% of the minimum number of hours required for full-time enrollment certification purposes. Minimum exemption thresholds are:

  • Undergraduate Students:

    Fall, Spring Semesters six (6) credit hours per semester

    All Summer Sessions Combined

    		six (6) credit hours

 

  • Graduate Students:
Fall, Spring Semesters four (4) credit hours per semester can be certified full time
All Summer Sessions Combined three (3) credit hours per session can be certified full time
Active Dissertation Status one (1) credit hour per semester must be certified as full-time

Between Semesters:

Students who are enrolled and regularly attending classes in a given academic semester/session will be entitled to the exemption from FICA tax withholding for any brief period of time between the end of one semester/session and the start of the succeeding semester/session if they qualified for the exemption in the immediately preceding semester/session. For example, a student who is enrolled during the second summer session would retain the exemption during the period between the end of the second summer session and the start of the fall semester and also during Christmas break.

In all circumstances, it is the responsibility of the student worker to register, maintain his/her student status and complete any required forms to be eligible for FICA exempt status. If a student fails to maintain exempt status during the fall and spring semester or summer sessions by dropping credit hours or terminating his/her student status, all wages paid from that point forward are subject to FICA.

Full-Time Employees:

All non-student and/or full-time employees will not be eligible for the student FICA exemption.

IRS Student FICA guidelines -Social Security Administration