Payroll Deductions

When calculating your pay, you need to consider your earnings, taxable income, and deductions. Here's how it works:

1. Start with your Earnings, which is the total amount of money you earned from wages or paid leave. This is your pay before any taxes or deductions are taken out.
2. Add any taxable benefits to your Earnings and then subtract any non-taxable deductions. This will give you your Taxable Income, which is used to determine tax withholdings.
3. Once taxes and deductions are calculated, you can determine your Net Pay by subtracting all deductions from your Earnings. Deductions may include taxes, mandatory deductions, and any voluntary deductions you have chosen. The remaining amount is your Net Pay, which is the actual money you will receive in your bank account or as a paycheck.

Payroll checks or deposits include many different voluntary deductions. The deductions would fall into the following categories:

Benefit Deductions

Many employees are eligible for benefits that are deducted from payroll earnings. All questions regarding these deductions should be directed to UPB at the University Payroll & Benefits Service Portal.

• Insurance: such as health, dental, life, disability
• Flexible spending accounts and health savings plan
• Supplemental retirement plans
• Optional State benefits

Campus Recreation

Employees that have membership in a campus recreation center may have deductions taken directly from earnings. Any questions regarding this deduction should be directed to the campus recreation center.

Charity Deductions

Employees may contribute to a variety of charitable organizations via payroll deduction as part of the State and University Employees Combined Appeal (SECA).

For information, please see:

• Chicago: Charitable Giving at UIC
• Springfield: State and University Employees Combined Appeal
• Urbana/Champaign: Campus Charitable Fund Drive

Parking

Employees holding parking permits for campus parking may have deductions taken directly from earnings. Any questions regarding this deduction should be directed to the applicable parking office (Directory - University of Illinois System - Parking).

Union Dues

Employees may request to have dues withheld or revoked through their labor union. Any questions regarding this deduction should be directed to the respective union.

Voluntary Agreements

Employees may discover that an Illinois State Offset Accounts Receivable deduction has been imposed (displayed as IL State Offset - Accts Rec on the earnings statement). In some cases, the employee can arrange for a voluntary deduction agreement to be set up, usually to reduce the withholding amount for each payroll.

UPB does not have any information or control over Illinois State Offset deductions. Employees must work with the agency that initiated the deduction.

Employee Instructions:

1. If unsure of the state agency money is owed to, contact the State Comptroller to inquire.
   • 312-814-2451 or
   • 217-782-7525
2. Contact the state agency and discuss the possibility of making repayment arrangements directly with the agency.
3. After an amount is agreed upon, complete a Voluntary Payroll Deduction Agreement form and send it to University Payroll & Benefits (UPB). Instructions are provided on the form.

UPB will set up a voluntary deduction according to this agreement effective the next available pay period.

The voluntary deduction will continue until (a) the agency sends a release or (b) a Revocation Form is submitted to stop the deduction.

1. Agency Release: upon completion of the agreement, the agency will send a release to UPB. The deduction will be stopped.
2. Revocation Form: the employee may submit a Revocation Form at any time to stop the deduction.
   • The revocation form is submitted online directly to UPB.
   • If the debt has not been satisfied, the Illinois State Offset deduction will be reinstated by the State Comptroller. The person listed as the agency contact is the only one who can inform the State Comptroller to stop the Illinois State Offset deduction. The agency controls when the involuntary deduction from the state will stop.

If you have questions about setting up a voluntary agreement, contact UPB through the University Payroll & Benefits Service Portal.

Involuntary deductions are required by court order or other legal means to recover a debt or obligation owed by the employee. University Payroll & Benefits (UPB) is required to withhold these deductions until officially released. Employees cannot stop involuntary deductions.

Question regarding most involuntary deductions may be directed to UPB at the University Payroll & Benefits Service Portal.

NOTE: UPB does not have any information or control over Illinois State Offset deductions.

Below are listed the most common involuntary deductions.

Child Support

If an employee is past due on child support payments, a court or state agency can order withholding from the employee's pay. UPB must withhold according to the court order (up to 50% of allowable disposable income). The deduction will continue until a release is received from the court or issuing agency indicating a change in amount or cessation of withholding. Child support orders are primarily transmitted through the electronic Income Withholding Orders (e-IWO) service.

• Deduction will be listed as Child Support on the earnings statement.
• Child support withholding takes priority over other involuntary deductions, except a pre-existing federal tax levy.

Illinois State Offset Deductions

An individual who owes money to any state agency for more than 90 days will be subject to the Illinois State Offset accounts receivable deduction. The agency sends the debt to the Illinois State Comptroller's Office, who will attempt to collect the debt from any payment issued by a State of Illinois institution, including the University of Illinois System.

An interface between the Illinois State Comptroller and the payroll system will automatically set up a deduction for debt recovery as follows:

• Deduction will be listed as IL State Offset - Accts Rec on the earnings statement.
• Deduction amount is 25% of disposable pay (gross pay minus legally required deductions).

In some cases, the employee can arrange for a voluntary deduction agreement to be set up in place of the state offset, usually to reduce the withholding amount each payroll. See the Voluntary Agreements section above for more information.

Illinois State Offset deductions are mandated by State Comptroller Act [15 ILCS 405/10.05 and 405/1005a] and Illinois Administrative Code 285.1104.

UPB does not have any information or control over Illinois State Offset deductions.

To inquire about the debt, the employee must contact the Illinois State Comptroller's office at 217-785-2463 or 217-782-7525.

Federal Tax Levies

Federal Tax Levies are wage garnishments issued by the federal government for the collection of an employee's earnings for unpaid federal taxes. Federal tax levies are different than most involuntary deductions because the Internal Revenue Service (IRS) takes all the employee's pay except for any amounts which are exempt from the levy. The employee will receive this exempt amount as take-home pay, which is calculated according to the table in Publication 1494.

The employee must return Form 668-W(c) to UPB with the completed Statement of Dependents and Filing Status within three days, or payment will be figured according to the table section indicating filing status: Married Filing Separately with no dependents (zero). NOTE: This filing status is not related to the Form W-4 filed by the employee.

The wage levy will continue until the balance is paid or the University receives a release from the IRS. UPB cannot alter the deduction amount and withholds according to IRS requirement.

This deduction will be listed as Federal Tax Levy on the earnings statement.

Garnishments

A garnishment is a court ordered deduction that the University of Illinois System must honor, for monies owed to a company or an individual. Therefore, UPB needs to receive another court order to terminate or make changes. The deduction will begin as soon as we receive the garnishment order. The amount of the deduction is the lesser of:

• 15% of gross pay minus retirement
  OR
• Gross minus retirement, federal & state taxes, OASDI and Medicare minus (45 times the federal minimum wage).

This deduction will be listed as Garnishment on the earnings statement.

UPB cannot take a garnishment deduction that will result in an employee taking home less than minimum wage. The deduction will continue until it is paid in full (including interest), and a release is received from the attorney that issued the garnishment.

The deduction amount is calculated based on the employee's pay status along with a deductions calculation provided to the court and the garnishment attorney.

If an employee is under bankruptcy protection or is in the process of filing, the bankruptcy attorney should be instructed to fax an Automatic Stay to the UPB office fax at 312-996-6542. This will terminate the garnishment deductions. Any money deducted after the date the bankruptcy was filed will be refunded to the employee. Any money withheld before the filing will be held until a Stipulation to Dismiss is received from the garnishment attorney.

NOTE: Wage assignments are not honored by the University of Illinois System. Only court ordered wage garnishments will be accepted.

State Tax Levies

Illinois Tax Levies are wage garnishments issued by the Illinois Department of Revenue for the collection of an employee's earnings for unpaid Illinois taxes. State tax levies follow the same calculation and bankruptcy rules as garnishments (see above).

This deduction will be listed as IL Dept of Rev on the earnings statement.

Federal Tax Withholding

Federal taxes are calculated according to an employee's Form W-4 Employee's Withholding Certificate as completed during the new hire process or via My UI Info.

State Tax Withholding

State taxes are calculated according to an employee's Form IL-W-4 Employee's Illinois Withholding Certificate as completed during the new hire process or via My UI Info. If working outside of the state of Illinois, please refer to the Tax Withholding Information webpage to determine the appropriate steps to take in order to have the correct state tax withholding applied.

See W-4 Withholding Allowance for more information about state withholding both in and out of Illinois.

FICA Tax Withholding

The Federal Insurance Contributions Act (FICA), mandates tax contributions into two federal insurance programs for many employees. FICA withholdings and earnings are reported to the Social Security Administration on Form W-2.

• Social Security (OASDI)

  Old Age, Survivors and Disability Insurance (OASDI) is more commonly known as Social Security. University employees who are eligible for the State Universities Retirement System (SURS) are exempt from OASDI withholding, as they contribute to SURS instead.

  A total of 12.4% of earnings subject to OASDI is contributed, divided equally between the employee and employer.

• Medicare

  Employees hired by the university after April 1, 1986 are subject to Medicare withholdings.

  A total of 2.9% of earnings subject to Medicare is contributed, divided equally between the employee and employer. The withholding amount for the employee is 1.45% plus 0.9% for wages in excess of $200,000 in a calendar year. The university, as the employer, matches an additional 1.45%.

• Student FICA Exception

  Under Internal Revenue Code §3121(b)(10), students enrolled in institutions of higher education may qualify for the student FICA exception on their earnings. Additional information can be found on the Student Employee FICA Exception page.

• Foreign National Nonresident Aliens

  Under Internal Revenue Code §3121(b)(19), nonresident aliens in a F-1, J-1, M-1, or Q-1 status are generally not subject to FICA. To determine eligibility for the exemption, foreign nationals must complete a Tax Status Review. Tax Status Reviews can be scheduled here: Tax Status Review.

State University Retirement System (SURS)

The State Universities Retirement System (SURS) is a state-wide system for Illinois public universities that provides retirement, disability, and related benefits to eligible participants and annuitants. Contributions to SURS are mandatory if you are eligible. See State Universities Retirement System (SURS) - System Human Resources for more information.

Most employees contribute 8% of their salary, while fire and police employees contribute 9.5%. The university provides a contribution portion which differs with each plan.

Employees that contribute to SURS do not contribute to the Old Age Survivor and Death Insurance (OASDI) portion (6.2%) of FICA, also known as Social Security.

The deduction from the employee's gross pay is pre-tax and is not included in Wages, tips or other compensation on Form W-2. Participation in SURS is indicated in Box 13 of Form W2, which will show the Retirement plan box checked.

For more information regarding the plans, contact SURS.

Supplemental Retirement Plans

Supplemental 403b and Deferred Compensation 457 retirement plans are available to eligible employees. Participation is voluntary and may be started or stopped at any time. Pre-tax and post-tax options are available. Deductions will be pre-tax or post-tax according to the option you participate in.

For more information, see Retirement & Investment Plans - System Human Resource Services.