Tax Withholding Information

Last updated Friday, August 28, 2020

Change your withholding elections (IRS Form W-4) in Workday.

Your tax residency address on the tax forms will pull from your Home (Primary) Address in Workday.

Federal Withholding Tax

Overview

Most payments to employees have Federal Withholding Tax deducted based on the IRS Semi-Monthly Tax Withholding Table (link coming soon), your IRS Form W-4 Withholding Allowance Certificate, and any pre-tax deductions you have elected.

Payments made separately from salary payments are exceptions to the withholding tax guidelines, as follows:

Supplemental Wage payments (e.g., Awards, Employee Separation Authorization Payments—vacation time paid at separation from the UW—as well as some other payments) have a Federal Withholding Tax rate of 22%.
Taxable Fringe Benefits (e.g., gift certificates, moving expenses, sports tickets, non-job related graduate student tuition over the IRS Section 127 exemption limit, as well as some other payments) have a Federal Withholding Tax rate of 22%.
Employee benefits such as health care and retirement are pre-tax reductions and are not included as part of your taxable income.
Stipend Payments
- Scholarship and fellowship payments are not considered wages, and are not reported on Form W-2. Such payments are reported at year end on IRS Form 1098-T.
- Scholarship and fellowship payments may be paid to individuals who are not students at the University of Washington. At year end, information on such payments are summarized in a letter from the ISC.
- For additional information on scholarship and fellowship payments, see IRS Publication 970 Tax Benefits for Education (PDF).
- The UW does not withhold federal tax for stipends, scholarships, or fellowships. Withholding information on the Form W-4 does not apply to such payments.

University of Washington employees cannot provide personal, legal, or tax advice.

Withholding Elections (IRS Form W-4)

New Employees – Set your initial withholding elections:
Your IRS Form W-4 must be completed in Workday so that the UW can withhold the correct federal income tax from your pay. Refer to the Add Federal Withholding Elections User Guide for details.

Update your current withholding elections:
Changes to your IRS Form W-4 in Workday can be made at any time throughout the year. Refer to the Update Federal Withholding Elections User Guide for details.

Abbreviated versions of the procedure to update your withholding elections have been translated into a number of languages, and are available for download on the Quick Guides – Translations page.

Foreign Nationals:
Foreign National employees have special rules for filling out IRS Form W-4.

Considerations

Exempt status on the IRS Form W-4 is valid for one year. If you are eligible to claim Exempt, your W-4 must be renewed each year by February. If your W-4 information is not renewed or updated on time, by IRS law your tax status automatically defaults to the Single tax tables and zero allowances.
The University of Washington will not refund federal withholding taxes due to either late or incomplete IRS Form W-4 information.

Additional Withholding Forms Requirements

If you are receiving a pension from the University of Washington, you will need to complete an IRS Form W-4P Withholding Certificate for Pension or Annuity Payments. This must be done on paper and submitted to the ISC.

If you are receiving a supplemental pension from the University of Washington, you will need to fill out IRS Form W-4P Withholding Certificate for Pension or Annuity Payments. If you have questions about your supplemental pension, contact the ISC.

OASDI (Social Security and Medicare) are mandatory federal payroll taxes. Federal Insurance Contributions Act (FICA) is the combined employee and employer portions of mandatory OASDI (Social Security and Medicare) taxes.

Social Security is withheld on taxable gross income up to an annual wage limit each year.

Medicare is withheld on taxable gross income. The rate is increased when the minimum subject gross threshold is crossed.

Exceptions to OASDI (Social Security and Medicare) taxation include:

IRS Student FICA exemption
- You must be:
  - a) In a student job class, and
  - b) attending school full time, and
  - c) working for an educational institution.

Scholarship and Fellowship Stipends
- Scholarship and fellowship earnings are not subject to OASDI (Social Security and Medicare) taxation.

Information on the Scholarship and Fellowship Stipends exemption

Foreign National employees may be exempt under certain circumstances.

Information on Foreign Nationals exemptions

Paid Family and Medical Leave

Refer to the WA Employment Security Department website for information.

WA Medical Aid/Worker’s Comp

Refer to the WA State Department of Labor & Industries website for information.

Working Outside WA State

State Income Tax

Washington is one of seven states in the US that do not have a state income tax. Employees working and residing in Washington have no state income tax liability. However, if you are working in a state that does have an income tax, the UW is required to withhold income tax for the state(s) in which your services are performed.

You are responsible for verifying that your Home (Primary) Address in Workday is accurate and properly reflects your tax residency address so your taxes will be withheld correctly.

You may be required to fill out additional state withholding tax forms in Workday – refer to the State and Local Withholding Elections User Guide.

If you have questions, contact the ISC and include “Payroll Tax Inquiry” in the Subject.

US Citizens Working Abroad

Because payments to employees who work outside of the US might not be subject to federal withholding tax, Washington State Medical Aid/Worker’s Compensation taxes or Paid Family Medical Leave tax, two important steps need to be taken to help ensure that employees are taxed correctly:

1. Confirm/Update the Employee’s Work Location in Workday.
If the employee’s Work Location in Workday is set to a local address, the employee’s pay will be subject to Washington state taxes. Make sure the employee’s Work Location is set to their out-of-country work location.

To verify the employee’s work location, navigate to their Worker Profile page in Workday and, under Job Details, review Location. If the Work Location needs to be updated, follow the guidance found in the Change Job – Data Change – Voluntary Location or Work Shift Change User Guide.

When updating the Work Location in Workday, if the country in which the employee resides/works is not listed, please contact the ISC for guidance.

2. Submit the IRS Form 673 to the ISC.
The employee will need to complete and sign the IRS’s Form 673 (PDF), permitting the University to exclude federal withholding tax.

Never email documents that include Social Security numbers!

Once completed, mail (not email) the Form 673 to the ISC at:

ISC Payroll Office
University of Washington
Box 359555
Seattle, WA 98195

Please note that there is an annual earned income exemption limit for federal withholding tax exemptions. Additionally, federal withholding tax is not withheld if it is reasonable to believe that an employee’s wages would be excluded under the Foreign Earned Income exclusions. For further details, refer to the IRS’s Publication 54 Tax Guide for US Citizens and Resident Aliens Abroad (PDF).