Payroll Deductions

The University of Illinois System is required by federal and state regulations to withhold certain deductions from wages. Requirements differ according to the deduction and the wages being paid. Employees can also request voluntary deductions for such purposes as supplemental retirement funds and work-related expenses, like parking.

Voluntary Deductions

University Payroll withholds voluntary deductions that are permitted by federal and state regulations and approved by the Senior Associate Vice President for Business and Finance or his/her designee. All voluntary deductions begin and end on the employee's authorization. For information about the types of deductions and how to begin or end one, consult Payroll Deductions - Payroll & Benefits.

Involuntary Deductions

University Payroll is required to withhold deductions when directed to by legal orders. These orders may be for child support, bankruptcy, tax levy, money owed a state agency, or general creditor debts. Employees cannot stop involuntary deductions.

Child Support - When the child support amount is required by a court or state agency order, it takes priority over a garnishment or any other legal order, except a pre-existing federal tax levy. Child support orders will not terminate until a release is received from the court or agency issuing the order, or when the employee no longer works for the System. The money is withheld beginning with the first pay period after the order is received and forwarded to the State Disbursement Unit or other applicable agency.

Illinois State Offset Deductions - If an individual has owed money to any state agency for more than 90 days, that agency sends the name to the Illinois State Comptroller's Office. That office maintains records of all such debts in an electronic file. University Payroll's system accesses that file each week looking for a match with System employees. If a match is found, a deduction code of IS1 is activated and 25% of disposable pay (gross pay minus legally required deductions) is automatically deducted from that employee's pay. This deduction will be listed on an employee's earnings statement as 'IL State Offset - Accts R'. If the employee owes for past due child support an additional deduction code of IS2 will be activated. The IS2 deduction is only deducted on final terminal benefits pay. This deduction will be listed on an employee's earnings statement as 'IL State Offset - Lump/Term'. If either deduction (IS1 or IS2) is active when an employee receives their final terminal benefits pay the System is required to deduct and send the entire balance of the amount due to the State Comptroller. These deductions are mandated by the State Comptroller Act [15 ILCS 405/10.05 and 405/1005a] and the Illinois Administrative Code 285.1104. University Payroll does not have additional information about the original debt. For information regarding local government entity debt, the employee must contact the Illinois State Comptroller's Office at 855-881-2301. For information regarding state agency debt, the employee must contact the Illinois State Comptroller's Office at 217-782-7525.

Garnishments - Garnishments are court ordered deductions for money owed to a company or individual. The System must respond to the court regarding the garnishment on or before the return date listed on the court order. The court and garnishment attorney determine the employee's pay status and calculate the amount of the garnishment deduction. The deduction begins as soon as the garnishment order is received and continues until it is paid in full or released by the court. Consult Payroll Deductions - Payroll & Benefits for more detailed information.

Federal Tax Levies - Federal tax levies are wage garnishments by the federal government to collect unpaid federal taxes. Consult Payroll Deductions - Payroll & Benefits for more detailed information.

Tax Deductions

Federal Tax Withholding - To ensure proper federal tax withholding, all employees must complete Form W-4, Employee's Withholding Allowance Certificate or the withholding form at My UI Info. University Payroll withholds an amount of tax based on marital status and the number of allowances indicated on Form W-4. The employee may also indicate a whole dollar amount to be withheld in addition to the required withholding.

If Form W-4 is not submitted, University Payroll withholds taxes at the rate for a single person with no allowances. If an employee's tax status changes, he or she must submit a new Form W-4 that reflects those changes. Submit a paper Form W-4 to University Payroll or use the online form in My UI Info.

Employees may claim they are exempt from federal taxes if they meet both these requirements:

• In the prior year, the employee received a refund of all federal income tax withheld because he or she had no tax liability.
• During the current year, the employee expects a refund of all federal income tax withheld because he or she will not have a tax liability.

To claim this exemption, the employee must submit a Form W-4 with University Payroll and write "Exempt" in the allowance space. Submit a paper Form W-4 to University Payroll or use the online form in My UI Info. This exemption must be renewed each year by submitting a new Form W-4 to University Payroll by February 15. If the Internal Revenue Service (IRS) requests a copy of an employee's Form W-4, the System is required to and will submit an employee's Form W-4 to the IRS.

Employees should either contact their tax advisors or use the Withholding Allowance Calculator to determine the number of allowances needed for their tax liability.

State Tax Withholding - To ensure proper state tax withholding, all employees must complete Form IL-W-4, Employee's Illinois Withholding Allowance Certificate, or the withholding form at My UI Info. The amount of tax withheld is based on the number of allowances indicated on Form IL-W-4. The employee may also indicate a whole dollar amount to be withheld in addition to the required withholding.

If Form IL-W-4 is not submitted, taxes will be withheld with no allowances. If an employee's tax status changes, he or she must submit a new Form IL-W-4 that reflects the changes. Submit a paper Form IL-W-4 to University Payroll or use the online form in My UI Info. An employee can only claim exemption from state withholding if they have also claimed an exemption from Federal withholding.

If an employee does not work and/or live in Illinois, use the table below to determine what to do about withholding:

Foreign National Tax Withholding - All foreign national employees have special withholding rules and must complete their Form W-4 at the University Payroll office (see 18.2 Foreign Nationals or Payments to Foreign Nationals.

State Universities Retirement System (SURS)

If an employee is eligible for SURS, participation begins on their first day of employment and requires a mandatory contribution to the retirement plan. Employees not eligible for SURS are subject to Social Security; nonresident aliens with visa status of F, J, or M and students are exempt. All other employees hired after April 1, 1986 are subject to the Medicare portion of FICA (1.45%, plus an additional 0.9% for wages in excess of $200,000 in a calendar year). For more information on retirement plans, consult Retirement and Investment Plans.

Forms Used in this Procedure

Form W-4
Form IL-W-4

Other Policies and Procedures

18.2 Foreign Nationals

Additional Resources

Payments to Foreign Nationals
Tax Withholding Allowance Certificates
Payroll Deductions - Payroll & Benefits
State Comptroller Act [15 ILCS 405/10.05 and 405/1005a]
Illinois Administrative Code 285.1104
My UI Info W-4 Form
Withholding Allowance Calculator
Retirement and Investment Plans

Last Updated: July 18, 2014 | Approved: Senior Associate Vice President for Business and Finance | Effective: March 2010