802 Mandatory Deductions
Payroll Policy and Procedure Manual
Section 800: Payroll Deductions - Employee Paid
Mandatory deductions are those required by State and Federal laws. Without these specific deductions in place, an employee cannot be paid in Banner. These deductions include:
- State and Federal income tax
- Social Security and Medicare tax
- Workers' Compensation Insurance and State Accident Insurance Fund
- Transit Tax
- Unemployment tax
Deductions are determined by the filing status provided by the employee on his/her W-4. If no W-4 is filed, per IRS policy, an employee's withholding is defaulted to a status of Single with Zero exemptions. Tax withholding is determined by graduated tax tables provided by State and Federal governments.
Ø Current annual assessment rates for the following can be found on the Banner Fringe Budgeting Rule Form NTRFRNG under the TSS, TME, TSF, TWC and TT1 Benefit codes. These deductions are system calculated and all are OPE related deductions. See 1000 Other Payroll Expenses (OPE)
Deductions for Social Security and Medicare tax are based on certain percentage rates set by the Federal government. Annual maximum withholding is set by the Social Security Administration for Social Security subject wages. Medicare Tax has no income limit. Once the maximum amount has been withheld, no further Social Security deduction is taken until the next tax year beginning in January. The percentages for Social Security and Medicare taxes may vary from year to year. Both the rates and the maximum amounts are on the online Fact Sheet available at the Social Security Website.
Students enrolled at least halftime (6 hours for undergraduates and 5 hours for graduates) in an OUS school are exempt from Social Security and Medicare tax on OSU wages while they are enrolled at the university; however, during any term the student employee is not enrolled at least halftime, typically summer break, these taxes will be deducted from their paycheck. Non-system students (enrolled or not at non-OUS institutions) are fully subject to Social Security and Medicare Taxes.
SAIF (State Accident Insurance Fund) is an insurance premium charged to employers to cover injured worker claims. It provides insurance to covered employers against liability for employee injury or illness arising out of or in the course of employment.
Workers Compensation assessment is based on the number of hours worked. Employees and employers alike are required to pay an assessment by payroll deduction for each full or partial hour of work. Overtime hours are included in the number of hours reported. This provides the funding of programs that assist injured workers.
802-04 Transit Tax
Mass transit district taxes are charged to employers on any employee physically working in an area with a mass transit system. The two largest in the state are Tri-Met (Portland Metro Area) and LTD (Lane County) but there are several other districts including Klamath Basin, Clatsop County, Hood River, Lincoln County, South Clackamas, Tillamook County, Rouge Valley and Salem. While this deduction’s setup is required on all employees, departments are charged only for those whose work locations are within the boundaries of a given transit district.
802-05 Unemployment Tax
Unemployment tax is a mandatory tax requirement for all but student positions. Students are eligible for student positions based upon their student status and as such, unemployment taxes are not paid on their behalf.