Tax Information
There are three main types of tax that may be withheld from your University paycheck. Please see below for additional information on each and instructions for completing your Employee’s Withholding Certificates through the Employee Dashboard in myBama.
Note: Payroll Services and the Tax Office cannot provide tax advice to employees. For assistance, please contact your accountant or qualified tax advisor.
Federal Income Tax
What is Federal Income Tax?
The U.S. federal income tax is collected by the Internal Revenue Service (IRS) on all forms of earnings that make up a taxpayer’s taxable income, including wages, salaries, commissions, bonuses, tips, investment income, and certain types of unearned income.
In the U.S., federal income tax rates for individuals are progressive, meaning that as taxable income increases, so does the tax rate. Federal income tax rates range from 10% to 37% based upon specific income thresholds. The income ranges to which the rates apply are called tax brackets. Income that falls within each bracket is taxed at the corresponding rate.
What is a Form W-4?
Form W-4 is an Internal Revenue Service (IRS) tax form that is filled out by employees to indicate their tax situation to their employer.
Employees must complete a W-4 so that the Payroll department can calculate the amount of federal tax to withhold from each paycheck based on marital status, number of exemptions and dependents, etc. For example, increasing the number of dependents on the form decreases the amount of money withheld from your paycheck. Life events such as a change in marital status or number of dependents are common reasons to update a W-4, but employees can generally change their withholding allowances at any time and for any reason. The Payroll department then calculates the amount of tax to withhold from a paycheck based on the employee’s taxable income, tax bracket and allowances on the W-4 form and remits the taxes withheld to the IRS.
How Do I Complete Form W-4?
UA employees must complete the W-4 Employee’s Withholding Allowance Certificate through the Employee Dashboard in myBama. Step-by-step instructions can be found in the link below.
Failure to submit a W-4 Form through the Employee Dashboard will result in your Federal Income Tax being withheld at the default status of single-0.
Helpful Links:
UA Employee Dashboard – W-4 Form Instructions
IRS Information – What is Taxable and Nontaxable Income?
IRS Information – W-4 Form and Tax Bracket
IRS Information – Tax Withholding and Estimated Tax
State and Local Income Tax
What is State Income Tax?
Alabama is one of many states which impose a state tax on personal income. State withholding tax is the money an employer is required to withhold from each employee’s wages to pay the state income tax of the employee.
Generally, all wages earned in Alabama are subject to Alabama withholding tax. Alabama income tax is required to be withheld from wages paid to an employee physically working in the state of Alabama. Please note that residency is not a factor. Therefore, wages earned by a resident or a non-resident while working in Alabama are subject to Alabama withholding tax.
What is Local Income Tax?
Additionally, some cities or localities may collect an income tax. For employees working outside of Tuscaloosa, your city may impose an income tax. If it does, you will have an amount withheld from each paycheck labeled with the name of your city or other locality tax. For example, UA employees working at the Gadsden Education and Research Center will see a deduction for Gadsden City Tax. This tax may also be referred to as a wage or occupational tax.
What is Form A-4?
Form A-4 is an Alabama Department of Revenue tax form that is filled out by employees to indicate their tax situation to their employer.
You must complete a form A-4 to let Payroll know how much state tax to withhold from your paycheck based on your marital status, number of exemptions and dependents, etc. Increasing the number of allowances on the form decreases the amount of money withheld from your paycheck. Like the W-4, you can file a new A-4 any time your situation changes, such as when you marry, divorce, or have a child. A change in status can result in more or less tax being withheld.
How Do I Complete Form A-4?
UA employees must complete the A-4 Employee’s Withholding Allowance Certificate through the Employee Dashboard in myBama. Step by step instructions can be found in the link below.
Failure to submit a Form A-4 through the Employee Dashboard will result in your State Income Tax being withheld at the default status of single-0.
Helpful Links:
UA Employee Dashboard – Form A-4 Form Instructions
FICA Taxes
What are FICA Taxes?
The Federal Insurance Contributions Act (FICA) mandates that every taxpayer in the U.S. must contribute to two programs: Social Security and Medicare. The amount you are required to contribute to FICA is defined as a percentage of your income. It works as follows:
Social Security Tax
The FICA Social Security tax is 6.2% of gross pay, paid by both the employee and UA, for a total of 12.4%. This is noted as ‘FICA OA’ on your UA paystub.
For FICA Social Security tax, there is a maximum gross pay amount subject to taxation for a given year. Once an employee reaches the taxable maximum, deductions for FICA OA will cease for the remainder of the calendar year; deductions will resume in the following January. This limit changes each year with the national average wage index. For the current year taxable threshold amount, visit the Social Security Contribution and Base Benefit page.
Medicare Tax
The FICA Medicare tax is 1.45% of gross pay, paid by both the employee and UA, for a total of 2.9%. This is noted as ‘FICA MD’ on your UA paystub.
For individuals that earn over $200,000, an additional 0.9% tax is charged to the employee. This additional amount is noted as ‘FIMA’ on your UA paystub.
Out of State Workers
For employees whose assigned work location is outside the state of Alabama, additional rules and requirements apply. Please review the Out of State Employment page. Once an out-of-state work location has been approved through the Out-of-State Employment Request Process, employees must complete the Affidavit of Residency for income tax purposes and mail the signed, notarized original to the Payroll Office.
Helpful Links:
Foreign Nationals / Non-Resident Aliens
For employees who are not U.S. citizens, please review the Tax Office International Tax page. Non-resident aliens should not alter their tax withholding certificates. If you are an NRA with questions about your income tax withholding amounts, please email internationaltax@ua.edu for assistance.
Helpful Links:
UA Tax Office – International Tax
UA Tax Office – Foreign National Tax FAQs
W-2 Wage and Tax Statement
What is the IRS Form W-2?
Employers must complete IRS Form W-2 and supply them to employees, the IRS, and some state tax agencies no later than January 31st of the year following the previous tax year. This is a form UA will provide to all employees who earned taxable wages during the previous calendar year. Form W-2 is a tax form that employees will need before completing their individual income tax returns.
How will I receive my Form W-2?
Form W-2 will be distributed electronically and/or by mail. The distribution method used may vary based on the individual’s completion of the Electronic W-2 Consent Form in the Employee Dashboard.
Changes to the W-2 Electronic Consent Form can be made through the Employee Dashboard by going to the Taxes section of the Dashboard and clicking the W2 Electronic Consent link. Changes should be made prior to December 31st if attempting to change the delivery method of the W-2 distribution in January.
Electronically
UA employees can access the electronic version of their Form W-2 through the Employee Dashboard in myBama. Step by step instructions can be found in the link below.
By Mail
UA employees who have not consented to electronic delivery through the W-2 Electronic Consent in the Employee Dashboard will receive their W-2 by mail before the IRS deadline of January 31st. W-2s are mailed to the most current mailing address on file.
Individuals who have completed the W-2 Electronic consent form through the Employee Dashboard will not receive a mailed copy of their W-2.
Assistance for Former Employees
Individuals who worked during the previous tax year but are not currently employed by UA will not have access to myBama and the electronic version in the Employee Dashboard. These W-2s will be mailed regardless of the previous W-2 Electronic Consent Form completed.
To update or confirm the mailing address that will be used for W-2 delivery, please contact the HR Service Center at 205-348-7732 before December 31st.
If an update to the mailing address was needed, but not completed prior to the W-2s being mailed, please contact Payroll at 205-348-2603 for assistance.
Helpful Links: