Tax Withholding Allowance Certificates
University Payroll is responsible for ensuring that the University is in compliance with numerous Federal and State laws and regulations relating to the withholding of employment taxes on various types of remuneration, including payments made to nonresident aliens, student FICA exceptions, and fringe benefits, such as tuition waivers. Section 18 - Taxes for more information on policies relating to nonresident aliens, taxability of tuition waivers, student employee FICA exception and fringe benefits. See Also NESSIE .
Federal Form (W-4) and State (Form IL-W4-NR) Withholding Certificates
To assure proper tax withholding all employees are required to complete an Employee's Withholding Allowance Certificate, Form W-4, for federal withholding, and Employee's Illinois Withholding Allowance Certificate, Form IL-W-4, for state withholding. The following information applies to both forms unless otherwise stated.
The amount of tax withheld is based on marital status and the number of allowances indicated on the Form IL-W-4, unless the employee, having met the necessary conditions, claims exemption from withholding (applies to federal form only). No fixed amount or percentage withholding designated by the employee is permitted. A specific dollar amount to be withheld in addition to the required withholding is permissible. If no Form W-4 is submitted, taxes will be withheld at the rate for the status of single with no allowances.
A Form W-4 is effective until a subsequent form is completed to replace the previous one, with the exception of federal forms claiming exemption from withholding, which must be renewed by February 15th of each year. The replacement Form W-4 becomes effective no later than the payroll period ending on or after the 30th day from the date it is received. If an employee's tax status changes they are required to submit a new Form W-4 to reflect those changes, so that the proper amount is withheld. Changes can be made via NESSIE , or the form may be downloaded, and the completed form submitted to Payroll Services.
The Internal Revenue Service has a Federal Tax Withholding Calculator that calculates the amount of tax required to be withheld as well as the number of allowances and marital status that should be claimed on the Form W-4 to have the withholding closely match the taxes due.
To ensure proper tax withholding on wages paid in Illinois and therefore subject to Illinois State income tax, employees are required to complete the W-4 form on the Compensation tab of NESSIE, and complete and submit the Employee’s Illinois Withholding Allowance Certificate, form IL-W-4, for state withholding.
The amount of tax withheld is based on the number of allowances indicated on the IL-W-4, unless the employee, having met the necessary conditions, claims exemption from withholding. No fixed amount or percentage withholding designated by the employee is permitted. A specific dollar amount to be withheld in addition to the required withholding is permissible. If no form IL-W-4 is submitted, taxes will be withheld at the earnings rate with no allowances applied.
A form IL-W-4 is effective until a subsequent form is completed to replace the previous one. The replacement form becomes effective no later than the payroll period ending on or after the 30th day from the date it is received.
Reciprocal Withholding Agreement with Illinois
Employees who are residents of Iowa, Kentucky, Michigan, or Wisconsin and receive compensation paid in Illinois may elect to claim exemption from withholding of Illinois Income Tax under the reciprocal withholding agreements between Illinois and these states.
To obtain this exemption individuals must complete an Employee’s Statement of Non-residence in Illinois, form IL-W-5-NR. Withholdings will be directed to the state indicated.
Additional information regarding forms IL-W-4 and IL-W-5-NR may be found at: http://www.revenue.state.il.us/TaxForms/Withholding/index.htm
Out of state Salary/Wage Payments
If a University employee receives compensation paid in another state, and the University is registered as doing business in that state (typically requires a physical office) the compensation is considered paid outside of Illinois. The University is required to withhold according to that states withholding regulations. The University is currently registered in the following states:
The employee should complete the withholding form for their state (or reciprocal state if applicable) and submit it to:
University of Illinois
809 S. Marshfield Ave., M-C 547
Chicago, IL 60612-7205
Last Updated: April 15, 2013