Calculation of Employment Taxes For Wages Paid in 2018

Social Security and Medicare Taxes Effective Jan. 1, 2018

Wages for Social Security and Medicare calculations are defined as Gross Pay, Longevity, Hazardous Duty, and USS less insurance premium redirect, flex contributions and pre-tax parking. Social Security and Medicare taxes are calculated as follows:

  • Social Security – Wages for Social Security x 6.2 percent, up to the annual IRS wage limit of $128,400
  • Medicare – Wages for Medicare x 1.45 percent. An additional Medicare tax of 0.9 percent applies to all wages above $200,000 for a combined rate of 2.35 percent.

Federal Withholding Taxes Effective Feb. 1, 2018

The University uses the IRS Monthly Percentage Method Tables for Income Tax to calculate federal withholding taxes. The steps for calculating federal withholding taxes are listed below:

  1. Find your taxable gross at the bottom of the second column on the far right side of your earnings statement.
    Note: With the exception of students from India, nonresident employees should add an additional $654.20 to their taxable gross calculation. This additional amount is added only once per month to the first check written.
     
  2. Subtract $345.80 for each allowance claimed on My Paycheck Profile (or Form W-4).
     
  3. If claiming Single or Married but withholding at higher rate, use table (a) Single Person.  If claiming Married, then use table (b) Married Person.
     
  4. All encumbered (Monthly) checks paying for the same month (pay period) will be added together for tax purposes even if written in separate months.
     
  5. All unencumbered (Hourly) checks with a check date in the same month will be taxed together regardless of the pay period. They will also be added to any encumbered payments with a check date in the same month.  Exceptions include vacation checks (taxed separately) and award checks (22% of taxable gross).
     
  6. For additional withholding, the amount of tax is first calculated according to the withholding allowances claimed on IRS Form W-4.  The additional amount entered on Line 6 of IRS Form W-4 is added to that figure.  This amount is added only once per month to the first check written.
     
  7. Changes to withholding status made during the month will be applied to all payments that are taxed together (as described in 4 and 5) for that month.  This will occur even if one or more of those payments have already been taxed using a different withholding status.

 

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