Each pay period, an employee's gross pay may be reduced by various deductions. Some deductions are required by law; others are optional and may be withheld at the request of the employee. Specific types of payroll deductions are listed below. The State Department of Accounting and General Services (DAGS) must approve the types of deductions that can be processed through the payroll. On your pay statement, deductions other than payroll taxes have an agent code and an agent number.
2. Payroll Taxes
The Internal Revenue Service (IRS) and other taxing agencies require that taxes be withheld from the gross pay of all employees unless the employee qualifies for an exemption. Taxes are taken from gross pay before any other deduction (gross pay is reduced by pre-tax deductions). Submit all forms to your department Personnel Officer.
A percentage of gross pay is deducted for both FICA Tax (Social Security) and FICA Medicare Tax contributions. In general, Student employees are exempt from both the FICA Tax and FICA Medicare Tax deductions during period of at least ½ time enrollment.
2.2. Federal Income Tax
The calculation of federal income tax is based on information submitted by the employee on the W-4 form. Employees complete a W-4 form when initially hired. Employees may submit a new W-4 when there is a change in dependent status or the employee wishes to change the amount of tax withheld (within IRS restrictions). Federal withholding tables can be obtained from IRS Publication 15T (revised June 2003) using page 2, table 1, then, page 3, table 3 to determine amount withheld for semi-monthly pay periods. Go to IRS Publications and Notices to view this document.
2.3. Hawaii State Income Tax
The calculation of state income tax is based on information submitted by the employee on the HW-4 form. Only state income tax for the State of Hawaii is calculated and withheld. Employees who believe that they are exempt from State of Hawaii income tax withholding must request an exemption by completing Form HW-6 and submitting to their personnel officer. The employing department must complete Form HW-7 if necessary and submit both forms to the State Department of Taxation. State withholding tables can be obtained from the State of Hawaii Department of Taxation Booklet A, Employer’s Tax Guide, page 28, semi-monthly pay periods. Go to the Hawaii State Tax Office Publications to view this document.
2.4. Tax Exemption for Non Resident Aliens
Employees who are citizens of and permanent residents of another country may qualify for exempt status from FICA and/or federal withholding. To apply for this exemption, complete IRS forms 8233 each calendar year. If qualified, Students will be exempt from both federal and FICA withholding. Faculty and Staff would only be exempt from federal withholding. Submit original forms to the University’s Tax Specialist at the Property and Fund Management Office, (808) 956-7162. The Tax Specialist will inform the Payroll Office if the employee receives a favorable decision (no response from the Feds within 10 days is considered to be favorable).
2.5. Earned Income Credit
Employees eligible for the Earned Income Credit may elect to receive an advance payment of the credit by filing a W-5 form. Earned Income Credit is a refundable tax credit provided for low income employees who have dependent children and maintain a household.
2.6. Part-Time, Temporary, and Seasonal (PTS) Deferred Compensation
Student employees not attending classes on at least a ½ time basis and part-time employees (less than 50%) are subject to FICA. The University has opted to deduct PTS Deferred Compensation instead of Social Security taxes in these situations (Medicare taxes are still withheld). Information on PTS Deferred Comp is posted at the OHR web site.
3. Other Mandatory Deductions
3.1. Retirement Contributions
Contributions to the Employees' Retirement System are required for employees who elected to remain in the contributory retirement plan (new employees are in the non-contributory plan). Your federal and FICA gross is reduced by your ERS contribution before taxes are deducted, but not your state gross.
3.2. Mandated Deductions
Other deductions may be mandated on an individual basis by court order or governmental agency. Such deductions may be required for child support, a tax levy, or a Writ of Garnishment. Mandated deductions are taken after taxes and retirement contributions, and before all optional deductions. State Executive policies may also mandate deductions for debts owed the University.
3.3. Union Dues
4. Voluntary Deductions
4.1. Medical Insurance
Premiums for a variety of insurance plans through the Hawaii Employer-Union Health Benefits Trust Fund (EUTF) may be paid through payroll deduction by eligible staff or faculty. Plans include coverage for health, dental, and vision. Eligible employees may also elect to enroll in the Premium Conversion Plan (PCP), which allows the University to deduct health, dental, and/or vision insurance premiums from gross pay before taxes are calculated. Consult with your Personnel Officer for details.
4.2. Flexible Spending Accounts
Flexible Spending Accounts allow eligible employees to set aside a portion of their annual salary to pay eligible medical expenses and qualified dependent care expenses incurred during the year before taxes are calculated. The plan administrator is Island Flex.
4.3. Parking Fees
Eligible employees may pay fees for parking permits to the University's Parking and Transportation Services by payroll deduction at a fixed rate per pay period. Deductions can be made pre-tax.
4.4. Fixed Amount to Savings
An employee may choose to have a fixed amount from each payroll directly deposited to a credit union savings account.
4.5. Investments / Tax Deferrals
Employees may choose to contribute to Deferred Compensation (IRS 457), Tax Deferred Annuities (IRS 403(b)), or U. S. Savings Bonds through a payroll deduction. Deferred Compensation and Tax-Sheltered Annuities are normally pre-tax deductions.
4.6. Charitable Contributions
4.7. Employee Organization
Employees may choose to have payroll deductions for union-sponsored programs, such as automobile insurance, life insurance, and prepaid legal plans. Contact your union for more information.