W-4: An employee may complete a new W-4 as often as he chooses during the calendar year. The payroll office cannot offer tax advice to the employee but will help the employee complete the form. We can advise whether your changes will increase or decrease the amount of tax being withheld. Any further questions would have to be answered by your tax preparer.
Calculations: The State System of Higher Education calculates federal withholding using the percentage method based on the employee s earnings and W-4. Because additional payments such as overtime, shift differential, and out-of-class pay are always made on a salary pay date, tax computation is done on the total earnings (biweekly salary payment plus additional payment).
Employee deductions for Retirement, Tax Sheltered Annuity, Medial Insurance Premiums, and/or Deferred Compensation reduce the taxable gross pay for Federal Withholding.
FICA Tax (Social Security/Medicare Tax)
The federal government determines the FICA tax rate and wage base for each calendar year. For the 2023 calendar year, the Social Security Administration has announced that deduction rates for employees and their employers will be 6.2% for Social Security and 1.45% for the Medicare tax. The maximum social security tax employees will pay during the 2023 calendar year is $9,932.40. There is no maximum amount for Medicare. Social Security and Medicare taxes will be deducted from all earnings, (salary, overtime, shift differential, etc.), until the maximum amount has been paid.
Local Service Tax (LST)
A $52.00 LST tax is deducted from all Millersville University faculty/staff employees for Millersville Borough. This tax is deducted each pay period for a total of $52 in a calendar year. For instance, a 26 pay employee would have $2 deducted each pay period. All employees who earn $12,000 or more in a calendar year are liable for the tax. Part- time employees who will not earn $12,000 in the calendar year should complete an exemption form and return it to Payroll. On behalf of the employee, the Payroll Office will send the form to the Millersville Borough Office. This form must be completed each year.
Pennsylvania State Withholding
3.07% of all earnings (with the exception of the Medical Insurance premiums) are deducted for Pennsylvania State Withholding. While most employees do not have the option of being exempted from state tax, employees do have the option of completing a form in the Payroll Office authorizing additional monies to be deducted beyond the 3.07%. The State of Pennsylvania requires employers to tax Pennsylvania residents and non-residents. Each reciprocal state requires Pennsylvania to report the employee's earnings to the employee’s home state. Only New Jersey requires a state tax deduction based on the New Jersey percentage method.
Local Wage Tax
Residence: The Local Wage tax is deducted for all Pennsylvania residents based on the percentage of earnings required by the employee's residence municipality. When completing the Residency Certification Form, the place of residence must be where your permanent home is (what address is on your driver's license, where do you vote). For example, if you reside in Lancaster City but use a post office box in Millersville for your mailing address, you should put Lancaster City on the Residency Certification Form.