GAP 101.4, Payroll Deductions | Accounting (2024)

I. General

II. Voluntary Deductions

III. Involuntary Deductions

I. General

Deductions are subtracted from an employee's gross pay based on established rates as well as employee requests for voluntary deductions. For payroll purposes, deductions are divided into two types:

• Voluntary deductions
• Involuntary (mandatory) deductions: taxes, garnishments, and fines

II. Voluntary Deductions

Voluntary deductions are amounts which an employee has elected to have subtracted from gross pay. Examples are group life insurance, healthcare and/or other benefit deductions, Credit Union deductions, etc. Additionally, voluntary deductions can be taken out of an employee’s gross pay as a pre-tax deduction, a tax deferred deduction, or a post-tax deduction.

Pre-tax deductions reduce the federal, state, and FICA taxable gross amounts. Tax deferred deductions reduce the federal and state taxable gross amounts. Post tax deductions are withheld after all taxes have been calculated and withheld.

To make changes (add, change, or delete) to voluntary deductions, the employee must contact the office responsible for that deduction (see list below). If a deduction does not appear on an employee's pay statement after sufficient time for processing, the employee should contact the office responsible for that deduction.

The most common voluntary deductions and the responsible office are listed below. Pre-tax deductions are indicated with an asterisk (*) and tax deferred deductions are highlighted with a number symbol (#). All other deductions are taken post-tax.

III. Involuntary Deductions

Garnishments
Garnishments represent amounts which Corporate Payroll Services is mandated by Federal or State law to withhold from an employee's pay to satisfy an employee's personal obligation. Examples include: federal, state, county or city tax levies, court ordered child support payments, or court ordered bankruptcy. Questions regarding garnishments should be addressed to the agency issuing the document.

Taxes
Social security (FICA) taxes are withheld from ALL employees' pay based on the published tax rates and wage base. There are only two exceptions:

1. Currently registered, full time Duke students, whose primary roles are students and not employees, are exempt from FICA tax.
2. F-1 and J-1 visa holders who are Non-Residents for U.S. tax purposes and have not met the substantial presence test are exempt from FICA tax.

Corporate Payroll Services is also required to withhold Federal and State income taxes from every employee's pay. The amount of withholding is based on the number of exemptions that the employee has claimed on tax forms W-4 and NC-4 and the current year's federal and state tax tables. Employees should periodically evaluate their tax situation and update their W-4 and NC-4 records online using Duke@Work to update their withholding allowances, if changes are necessary.

Employees may request that a fixed amount of federal and/or state income tax be withheld in addition to their regular withholding. This fixed federal or state tax deduction may be for any amount and may be discontinued at any time by processing a change using the Duke@Work module.

Employees who need assistance determining withholding requirements should contact individual tax accountants. Other Duke personnel are not permitted to administer tax advice.

If an employee does not file a W-4 and/or NC-4 form, the tax exemptions default to zero withholding allowances and "single" marital status.

Note: The Corporate Payroll Service’s team is required to submit copies of W-4 and NC-4 forms to the Internal Revenue Service and the N.C. Department of Revenue when the following conditions are met:

• an employee claims more than 10 exemptions
• an employee claims "exempt" from tax withholding

In each case, paper forms W-4 and NC-4 must be submitted to the Corporate Payroll Services team for processing.