PY - Enter Employee's Tax Form W-4 Withholding Allowance Certificate

GENERAL DESCRIPTION:

This document explains how to add Tax Form W-4 Employee's Withholding Allowance Certificate in PeopleSoft HRS for a new employee and update W-4 tax status for existing employees. Form W-4 is used to withhold the correct federal and state income tax from the employee's pay.

PROCESS CONSIDERATIONS:


You may click on the links below to navigate directly to a section:


PROCEDURE STEPS:

To enter an Employee's Tax Form W-4(Employee's Withholding Allowance Certificate) in HRS (New Hire):

1. Navigate to: Payroll for North America > Employee Pay Data USA > Tax Information > Update Employee Tax Data.

2. In the Update Employee Tax Data screen, enter the 8-digit employee ID in the EmplID field, and click the Search button.
update tax entry page
3. The Federal Tax Data tab displays for the employee. Verify the employee name and Person ID (also known as Empl ID).

4. For new hires, the Effective Date field automatically displays the hire date of the employee (e.g. 08/15/2011). The text, "This data was last updated by Hire Procss" (e.g. Hire Process) indicates the employee is a new hire.
https://kb.wisc.edu/images/group61/16889/taxeffectivedate.jpg
5. To add a new effective date row, click the plus icon, located in the Effective Date section.

warning sign A new row must be added to document a W-4 was received, even if the new W-4 matches existing data in HRS

6. In the new Effective Date field, change the current date to the day after the hire date (e.g. hire date plus 1 day). For our example, this date would be 9/6/18.
https://kb.wisc.edu/images/group61/16889/addroweffectivedate.jpg
7. In the Federal Withholding Elements section:

Select the correct Special Withholding Tax Status
a)  Default value is None. This means no special status exists and that federal withholding tax should be calculated based on the employee's gross income, marital status, and withholding allowance. (This option applies for most employees).
b)  No Taxable Gross, No Tax Taken option - Employee does not have reporting and withholding obligations with the U.S. Federal government.  (This is not a common option). One example would be for non U.S. Citizens or foreign nationals who are working for the University in a foreign country and are not required to file federal tax in the United States.
8. Maintain Taxable Gross option - Employee has to report taxable wages to the U.S. Federal government, but tax does not have to be withheld from the employee's wages. Two examples are:
a) Employee claims EXEMPT for Federal Tax

b)Employee has an applicable IRS Form 673 | Statement for Claiming Exemption From Withholding on Foreign Earned Income Eligible for the Exclusion(s) Provided by Section 911 on file.
Non-Resident Alien option - Employee is a non-resident alien or claiming tax treaty.

9. Select the correct Tax Marital Status, (The default value is Single). Select an option to indicate the employee's marital status for federal withholding. This should match what is on the employee's W-4 form, Marital Status - For Tax Withholding section.

10. Enter the Withholding Allowances number (The default value is 0). Enter the number of allowances an employee claims for federal withholding tax purposes. This number should match what is on the employee's W-4 form, Federal Tax section, Number of Allowances for Federal Tax box.

11. In the Additional Amount field, enter the flat dollar amount (e.g. 50.00) of additional Federal Tax to be withheld per paycheck. This amount should match what is on the employee's W-4 form, Federal Tax section, Additional Federal Tax to be Withheld box.
https://kb.wisc.edu/images/group61/16889/federalwitholdingnew.jpg
12. In the W-4 Processing Status section select:

      ●  None - Select this option to indicate no change.

13. Notification Sent - Select to indicate that the employee has been notified to submit a new Form W-4.

14. New W-4 Received - Select to indicate that a new Form W-4 has been received.(Not applicable for first time entry)
https://kb.wisc.edu/images/group61/16889/9.2updatetaxfedw4processing.jpg
15. In the Lock-In Details section verify if a lock in letter has been received and entered by the UW Service Center
Letter Received checkbox - This is selected to indicate that the employee has received a lock-in letter from the U.S. Internal Revenue Service (IRS).
●  All lock in letters are processed at the Service Center. A new W4 can only be entered if it falls within this limitation. (ie. The employee defined a lower withholding allowance than the limitation, which will allow more tax withheld).
●  Limit On Allowances number: (Default value is 0). The number that is entered is the amount defined in the lock in letter as the employee's federal withholding allowance limitation.
https://kb.wisc.edu/images/group61/16889/9.2updatetaxfedlockinletter.jpg
16. The State Tax Options section is not used at the University of Wisconsin.

17. The Special Tax Form Renewal section is customized for the University of Wisconsin to record special tax forms for which an employee might file. It can be used in queries and in reporting to provide information for renewal purposes.

18. In the Tax Form Renewal field, click on the data lookup icon to display a list of special tax forms.
https://kb.wisc.edu/images/group61/16889/9.2taxlookuptaxform.jpg
19. In the Look Up Tax Form Renewal, Search Results screen, select the desired IRS special tax form (IRS Form 673 is the only form that applies on the Federal Page).

20. The selected form is displayed in the Tax Form Renewal field.

21. In the Tax Treaty/NR Data (NR represents Non-Resident Alien) section, complete the fields below, as indicated on the employee's W-4 form, section titled, All International Visitors Complete the Following.

22. When finished entering information on the Federal Tax Data tab, DO NOT SAVE YET.  You will need to enter and/or verify information on the State Tax Data tab.


Enter Employee's State Tax Data from Form W-4 (New Hire)

To access the State Tax Data tab:
●  If your cursor is at the top of the page, click the State Tax Data
●  If your cursor is at the bottom of the page, you can click the State Tax Data hyperlink.
On the State Tax Data page, notice that the Effective Date for the hire date plus 1 (e.g. 09/06/2018) is copied over from the Federal Tax Data page. This is because the Federal Tax Data page and the State Tax Data pages are linked together.

1. In the State Information section, the default values pull in. For employees that reside and/or work outside the state of Wisconsin the default values will need to change, see below for specific values depending upon state of residency and/or work
Note: In PeopleSoft, an employee is required to have both a Resident State and a UI Jurisdiction State.

https://kb.wisc.edu/images/group61/16889/statetabnew.jpg

2. In the Special Withholding Tax Status, there are several options available:
●  None (default value). This means no special tax status exists, and that State withholding tax should be calculated based on the employee's gross income, marital status, and withholding allowance. (This option applies for most employees).

●  No Taxable Gross, No Tax Taken option - Employee is exempt from State of Wisconsin withholding tax. Select this option if the employee has indicated they are a resident of Indiana, Illinois, Michigan or Kentucky from Form W-4, section titled, "Non-Resident of Wisconsin."  Also select this option if the employee is living and working in a state other than Wisconsin, and has gross wages paid by the University of Wisconsin.
3. Maintain Taxable Gross option - Select this option if the employee is exempt from State of Wisconsin withholding tax.  (On the employee's W-4 form, this would be indicated in the Withholding Information section, Exempt for Wisconsin State Tax box is checked "Yes").
●  Non-Resident Alien option - Employee is a non-resident alien or claiming tax treaty.
4. In the Tax Marital Status, the default value is Single, enter the value that appears on the employee's W-4.
●  If the withholding status is "Married but withhold at higher single rate", select S for Single.

●  If the employee is claiming exempt from withholding, their selection should be "X".
5. Enter the Withholding Allowances, (The default value is 0)an employee claims for state withholding tax purposes.

6. In the Additional Amount field - Enter the flat dollar amount (e.g. $25.00) of additional State Tax to be withheld per paycheck.
●  Additional Allowances, only used with California residents, see below.

https://kb.wisc.edu/images/group61/16889/statewitholdingnew.jpg

7. In the Lock-In Details section:
●  Letter Received checkbox - This is selected to indicate that the employee has received a lock-in letter from a state's Department of Revenue (All lock in letters are processed at the Service Center)

●  Limit On Allowances number: (Default value is 0). The number that is entered is the amount defined on the lock in letter as the employee's State withholding allowance limitation.
8. The Tax Form Renewal Processing Status section lists options to indicate the workflow status of the State Exempt form renewal status.

9. The UW Special Tax Form Code section is customized for the University of Wisconsin to record special State tax forms for which an employee might file. It can be used in queries and in reporting to provide information for renewal purposes.
●  In the Tax Form Renewal field, click on the data lookup icon to display a list of special tax forms.

●  In the Look Up Tax Form Renewal, Search Results screen, select the desired special State tax form.
•  WI W-200: Form W-200, Certificate of Exemption from Withholding for Prepayment of Estimated Tax (if the employee is claiming exempt status for •  WI tax).
•  WI W-220: NonResident Employee's Withholding Reciprocity Declaration (if the employee claims a State Reciprocity on the University's W-4 form).
•  WI WT-4A: Wisconsin Employee Withholding Agreement (if the employee submits this form with their W-4)
●  The selected form (e.g. WI W-200)  is displayed in the Tax Form Renewal field.
10. To save the W-4 record for the new employee, click Save, located at the bottom of the screen.
https://kb.wisc.edu/images/group61/16889/9.2taxstatelowersection.jpg

Note: The Local Tax Data tab is not used.


Entering State Tax Data for States other than Wisconsin

If Employee is Legal Resident of Indiana, Illinois, Michigan or Kentucky (the employee would have checked one of the reciprocity declaration boxes on their W4) make the following changes:

1. In the State Information Section:
●  Uncheck the Resident box so that it is blank.
●  Check the box labeled, "Non-Residency Statement Filed"
Note: This option indicates the employee has filled out the proper paperwork for reciprocity, which can be found on the W-4 form or the separate Wisconsin Tax Form W-220 NonResident Employee's Withholding Reciprocity Declaration).
2. In the Special Withholding Tax Status field select No Taxable Gross, No Tax Taken.

3. In the UW Special Tax Form Code section, select "04" for reciprocity form WI W-220.

https://kb.wisc.edu/images/group61/16889/9.2statereciprocity.jpg



If Employee is a Legal Resident of Another State (Not WI, CA, IN, IL, MI, or KY) and works IN WI (employee would have defined tax residence location on W4 outside of WI, but work location as WI):

1. In the State Information Section:
●  Leave the default values "as is" (Resident and UI Jurisdiction checked)
2. In the Special Withholding Tax Status leave the default value of "None".

Note: Employees are liable for taxes in Wisconsin so the withholding is the same as if they were a Wisconsin resident.

https://kb.wisc.edu/images/group61/16889/9.2statenonreciprocity.jpg


If Employee is a Legal Resident of Another State (Not WI, CA, IN, IL, MI, or KY) and Works OUTSIDE of WI (employee would have defined tax residence AND work location outside of WI on W4):

state w4
1. In the State Information Section:
●  Leave the UI Jurisdiction checked and uncheck Resident
2. In the Special Withholding Tax Status select No Taxable Gross, No Tax Taken.

nttntg

3. In the UW Special Tax Form Code Section:
●   Select 07 for Non-Wisconsin Resident and Work Outside of Wisconsin.
state nttntg



If Employee is a Legal Resident and WORKS in California:

NOTE: we need to also collect CA W4 also (DE-4) when the employee claims exempt from CA withholding. The DE-4 is also an acceptable document outside of the UW W-4. Send all CA W4's to the UW Service Center for reporting requirements (fax 608-890-2327).

1. In the State (WI) Information Section:
●  Uncheck Resident
●  Verify UI Jurisdiction is checked

2. In the Special Withholding Tax Status (WI) select No Taxable Gross, No Tax Taken.

3. Back again in the State Information (WI) Section:
●  Add a new row (click the plus sign to add a new row)
●  In the new row, in the State field, click on the data lookup icon and select CA for California.
●  Verify that Resident is checked and UI Jurisdiction box is unchecked.
●  Select SDI Status: Not Applicable
4. In the State Withholding Elements section select Special Withholding Tax Status of None.

5.
Enter Marital Status, Withholding Allowances and any Additional Allowances - if applicable. 

6. The California Wage Plan Code section, click on the drop-down arrow and select Disability/Unemployment Plan  = None/None.
https://kb.wisc.edu/images/group61/16889/californianew.jpg
7. Add the Special Tax Form Code if the CA tax resident files a CA W4 Form (DE 4), code "06". *Required if they claim CA exemption from withholding.
ca tax code



If Employee is a Legal Resident of Illinois:

NOTE: we need to also collect IL-W-4 for all IL reporting and withholding. 

1. In the State (WI) Information Section:
●  Uncheck Resident
●  Verify UI Jurisdiction is checked
2. In the Special Withholding Tax Status (WI) select No Taxable Gross, No Tax Taken.

3. Back again in the State Information (WI) Section:
●  Add a new row (click the plus sign to add a new row)
●  In the new row, in the State field, click on the data lookup icon and select IL for Illinois.
●  Verify that Resident is checked and UI Jurisdiction box is unchecked.
4. In the State Withholding Elements section select Special Withholding Tax Status of None.
  
5. Enter Tax Marital Status of Not Applicable or Exempt if claiming exempt.

6. Withholding Allowances from IL Form IL-W-4 line 1

7. Additional Amount - if applicable from IL Form IL-W-4 line 3

8. Additional Allowances - if applicable from Il Form IL-W-4 line 2

9. Click Save.
w4 il
10. Enter Tax Distribution to IL 100% (employees are defaulted to WI).   Path: Payroll for NA/Employee Pay Data USA/Tax Information/Update Employee Tax Distribution
Add a new row for IL 100% tax distribution for each employee record. Us the same effective date as W4 page.
dist il



If Employee is a Legal Resident and WORKS in Minnesota:

NOTE: we need to also collect W-4MN for all MN reporting and withholding.
1. In the State (WI) Information Section:
●  Uncheck Resident
●  Verify UI Jurisdiction is checked
●  In the Special Withholding Tax Status (WI) select No Taxable Gross, No Tax Taken.
2. Back again in the State Information (WI) Section:
●  Add a new row (click the plus sign to add a new row)
●  In the new row, in the State field, click on the data lookup icon and select MN for Minnesota.
●  Verify that Resident is checked and UI Jurisdiction box is unchecked.
3. In the State Withholding Elements section select Special Withholding Tax Status of None. 

4. Update Tax Marital Status.

5. Withholding Allowances from W-4MN line 1

6. Additional Amount - if applicable from W-4MN line 2

7. Click Save.

8. Enter Tax Distribution to MN 100% (employees are defaulted to WI).

9. Path: Payroll for NA/Employee Pay Data USA/Tax Information/Update Employee Tax Distribution

10. Add a new row for MN 100% tax distribution for each employee record. Us the same effective date as W4 page.



If the Employee is an International Non-resident Alien for Tax Purposes:

1. In the State Information Section:
●  Leave the default values "as is" (Resident and UI Jurisdiction checked)
●  In the Special Withholding Tax Status leave the default value of "None"

https://kb.wisc.edu/images/group61/16889/9.2statenonreciprocity.jpg



Update W-4 Tax Status for Existing Employees

Employees may submit updated tax withholding information throughout their employment for Federal and/or State purposes. Once the departments receive these W-4's, the employee's information will need to be updated accordingly. To update an Employee's Tax Form W-4 (Employee's Withholding Allowance Certificate) in HRS (Existing Hire):

1. From the PeopleSoft HRS Main Menu, navigate to: Payroll for North America > Employee Pay Data USA > Tax Information > Update Employee Tax Data.

2. In the Update Employee Tax Data screen, enter the 8-digit employee ID in the EmplID field, and click the Search

3. The Federal Tax Data tab displays for the employee. Verify the employee name and Person ID (also known as Empl ID).

4. Verify that there is not a Lock - in letter documented (check mark) on either the Federal or State Page.

warning sign   If there is a lock-in letter documented contact the Service Center.

5. Add a new ROW on the Effective Date section for the new W-4 Form (click the Plus icon, located in the Effective Date section on the Federal Tax Data Page, which will also add a row to the State Tax Data page).

6. In the new Effective Date field, change the current date to the day of the new W-4 form received.

7. Review and update the Federal Tax Data and State Tax Data Pages as appropriate, see above for details on how to change this field if applicable.

8. To save the W-4 record for the new employee, click Save, located at the bottom of the screen.



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