Payroll Taxes

New Hires Federal and State Withholdings

New employees must complete both Form W-4 (Employee’s Withholding Allowance Certificate) and Form VA-4 (Employee’s Virginia Income Tax Withholding Exemption Certificate) online using Employee Self-Service (ESS).

If no form or systems update is received, Payroll, following IRS guidelines, must withhold taxes at the default rate of single with zero exemptions – the highest withholding rate. New staff and faculty will be given these forms to complete during their Benefits Orientation Meeting.

Federal Insurance Contributions Act (FICA)

Student FICA Tax Exemption

William & Mary will follow the safe harbor rule outlined in Revenue Procedure 2005-11, which states that an individual whose enrollment status is at least that of a half-time under-graduate, half-time graduate, or a professional student may qualify for the student FICA exception with respect to services performed for an institution of higher education. All students employed by and enrolled at W&M and who meet these safe harbor guidelines will be treated as exempt from FICA taxes, while those student employees who do not will be subject to FICA taxes on their wages.

Any student worker with an active faculty or staff assignment is not eligible for the FICA exemption on any assignment; there are no exceptions.

FICA Status of Foreign Nationals

Both the Internal Revenue Code (26 USC 3121 (b) (19)) and the Social Security Act (42 USC 410 (a) (19)) allow an exemption from Social Security/Medicare taxes to alien students, scholars, teachers, researchers, trainees, physicians, and other non-immigrants who have temporarily entered the country on F-1, J-1, M-1, Q-1, or Q-2 visas and who are classed as non-resident aliens under the residency rule; meaning that international students in F-1, J-1, or M-1 non-immigrant status who have been in the U.S. less than 5 calendar years are considered Non-Resident Aliens (NRA) and are exempt from FICA taxes.

International students who have been in the U.S. for more than 5 calendar years are deemed Resident Aliens and are liable for FICA taxes unless qualifying for the student FICA exemption under IRC section 3121 (b) (10) previously discussed in this policy.

The hiring department and/or employee must notify the Payroll Office if they are in the U.S. with a qualifying Visa to ensure they receive the proper tax treatment.

Over-Withheld Income Taxes

As an employer, W&M is required to withhold income taxes from an employee’s pay according to the employee’s W-4 and VA-4 forms that are on record at the time of payment. It is the employee’s responsibility to complete these tax forms and to do so correctly. If an employee fails to complete the forms, and if income taxes are over-withheld as a result, the Payroll Department will not refund any of the taxes withheld. If eligible, the employee can obtain a refund of any over-withheld income taxes when filing a personal income tax return for that year.

FICA Tax Refunds for Prior Tax Years

The university does not process refunds for FICA taxes withheld in previous tax years. Individuals seeking a refund of FICA taxes must submit their request directly to the Internal Revenue Service (IRS) in accordance with the established procedures outlined below.

Procedures:

To request a refund of FICA taxes from past tax years, use IRS Form 843 on the official IRS website.
Carefully follow the instructions provided with Form 843 to avoid delays or denial of your refund.
Attach all necessary documents as per the instructions for Form 843. Accuracy and completeness are crucial for IRS processing.
Submit Form 843 and required documents within the IRS’s specified timeframe to maintain eligibility for a refund.
Seek professional help if needed for preparing and submitting your refund request. The university does not offer direct assistance for FICA tax refunds.

While the university does not process FICA tax refunds, we are committed to providing information and guidance to assist individuals in understanding their tax obligations. Individuals may contact the university’s Payroll Office at [[foreignnationals]] for general information but should seek IRS guidance for specific refund-related inquiries.

Changing Tax Information

If an employee wants to change their current tax withholding rate, a new W-4 and/or VA-4 Form must be completed in Employee Self-Service (ESS). Changes may be made at any time throughout the year.

A W-4 or VA-4 form remains in effect until the employee submits a new form. When an employee submits a W-4 or VA-4 form that replaces an existing form, the Payroll Department must implement the withholding change no later than 30 days from the date the form is received. The withholding change cannot be implemented for a payroll period that ends before receipt of the new form.

Effective 1/1/2020, the IRS has released an updated version of Form W-4 to reflect federal tax law changes that took place in 2018. You can find helpful information regarding this updated form on the IRS website under Frequently Asked Questions on the 2020 W-4. We also urge you to perform a "paycheck checkup" using the IRS Tax Withholding Estimator to see if you need to adjust your current withholding.

Please refer to Changes to the 2020 Form W-4 (pdf) for additional information. For assistance with updating your Form W-4 in Banner Self Service, please see Entering Your W-4 into Self Service (pdf).

Exemption from Withholding

Employees can claim exemption from income tax withholding if they meet IRS guidelines or the Virginia guidelines. Information on claiming exemption from withholding can be found on the requisite tax forms. No federal and/or state taxes will be withheld by claiming exempt status.

Mandatory Renewal of Exemption from Withholding

Exempt status expires at the end of every calendar year. Therefore, employees must complete new tax forms each calendar year to claim exempt status at the federal and state levels.

If an employee fails to renew their withholding exemption, W&M will begin withholding income taxes during the next pay period at the default maximum withholding amount, which is single with zero exemptions. No refunds will be given by the Payroll Department due to an employee’s failure to update tax documents in a timely manner.