Note: This is a printed version of https://isc.uw.edu/your-pay-taxes/withholding. Please visit this page on the ISC website to ensure you're referencing the most current information.
Tax Withholding Information For US Citizens
On This Page:
- Calculating Your Federal Withholding Tax and Completing/Updating Your W-4
- Calculating Federal FICA and Other Mandatory State Taxes
- Withholding For Employees Working Outside WA State:
Calculating Your Federal Withholding Tax and Completing/Updating Your W-4
If you wish to calculate your Federal Tax Withholding, refer to the Calculating Your Withholding page.
Then, to specify your withholding elections in Workday, follow the appropriate instructions below:
Set your withholding elections for the first time
For all new employees except Foreign Nationals*
Refer to the Add Federal Withholding Elections User Guide for instructions.
Update your current withholding elections
Make changes to your IRS Form W-4 at any time per the instructions in the Update Federal Withholding Elections User Guide.
*Foreign National employees have special rules for filling out IRS Form W-4.
Things To Keep In Mind
- 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.
Note For Pension Recipients
If you are receiving a pension or supplemental pension from the UW, you will additionally need to download, print, and complete IRS Form W-4P, and mail the completed paper form to the ISC.
Calculating Federal FICA and Other Mandatory State Taxes
Most payments to employees have Federal Withholding Tax deducted based on the IRS Semi-Monthly Tax Withholding Table, your W-4, and any pre-tax deductions you have elected.
Open/Expand a menu below for information; guidance about calculating your withholding for any of these other deductions can be found on the Calculating Your Withholding page.
FICA (Federal Insurance Contributions Act) is the combined employee and employer portions of mandatory Social Security (OASDI) 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 FICA taxation include:
Refer to the WA State Department of Labor & Industries website for information.
The following types of payment, since they are separate from your salary, are exceptions to the withholding tax guidelines:
- 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 cards, 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, refer to 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.
Withholding For Employees Working Outside WA State
We strongly recommend out-of-state employees and their supervisors review UWHR’s Remote Work Location and Out-of-State Work Policy.
Working In a Different US State
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.
To ensure your taxes will be withheld correctly, employees working in a state with an income tax should:
1. Verify that your Home (Primary) Address in Workday is accurate.
The Home Address you have specified in Workday must reflect your tax residency address. Visit the Managing Your Personal and Work Information in Workday page for guidance.
2. Fill out additional state withholding tax forms in Workday if/as needed.
Refer to the State and Local Withholding Elections User Guide for guidance.
Administrators who support employees working in a state with an income tax should verify that the Employee’s Work Location in Workday is set to their state of residence, and correct it if not. If the employee’s Work Location in Workday is set to a WA state address, their pay will be subject to Washington state taxes.
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.
If you have questions, contact the ISC and include “Payroll Tax Inquiry” in the Subject.
Guidance for Foreign Nationals working abroad can be found on the Foreign Nationals Payment & Tax Information page.
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, steps must to be taken to help ensure you are taxed correctly.
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).
Before your department initiates your hire and/or contacts ISC Payroll, open/expand the menu below for step-by-step guidance.
ALL steps must be followed, in the order presented:
1. Review UWHR’s policy regarding international remote work for staff and student employees.
2. Secure required approvals in advance: ensure the appointing authority is aware the employee is working remote internationally and that a telework agreement is in place with the department.
If the employee will be paid from a grant, also ensure there are no compliance issues with the employee working internationally.
3. The department next needs to notify and coordinate the hire with UW Tax Office – contact email@example.com.
Once the Tax Office has approved the remote work overseas, the department will need to contact the ISC with the following statement: “The UW Tax Office has approved remote work overseas for [employee’s name and EID].” The ISC will not process paperwork for requests that have not been approved by the UW Tax Office.
Simply notifying the Tax Office does not mean the unit then has approval to hire or transfer, nor does it eliminate the unit’s obligation to seek counsel and ensure compliance with all state- or country-specific laws.
4. The employee should next:
- Review the IRS’s Publication 54 Tax Guide for US Citizens and Resident Aliens Abroad (PDF).
- Complete and sign IRS Form 673 (PDF), permitting the University to exclude federal withholding tax.
- Mail (NOT email) the completed Form 673 to the ISC at the address listed on the Contact the ISC page.
5. To help ensure proper taxation, the department should confirm/update the employee’s Work Location in Workday (employees cannot make this update themselves) so it is set to the non-US work location. If the Work Location in Workday is set to a local address, pay will be subject to Washington state taxes.
Notes for HCM Initiate 2s
⇒ If the employee’s 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, if the country in which the employee resides/works is not listed, please contact the ISC for guidance.
6. Lastly, the employee should verify their Home (Primary) Address in Workday accurately reflects their overseas location, and that they’ve designated a Mailing address. Visit the Managing Your Personal and Work Information in Workday page for guidance.
Then, once you return to the US:
- To help ensure proper taxation, your department should update your Work Location in Workday to your US location (you cannot make this update yourself).
- You will need to complete the Form I-9. Federal law requires employees to complete their Form I-9 within three business days of their first day working locally to verify they are authorized to work in the United States.