Taxable Earnings
Taxable Earnings is the portion of your gross earnings that is subject to being taxed.
Federal and state taxable earnings are the total salary plus non-wage compensation, reduced by "pre-tax" deductions for dental, health and vision insurance, Unum Accidental Death & Dismemberment (AD&D), dependent care, flexible medical savings accounts, supplemental medical plan, pre-taxed parking, retirement contributions and annuity payments (403b, 401k, and 457 Deferred Compensation).
Once your Federal and State taxable earnings are determined, the taxes are calculated using the Annualized Tax Method (pdf).
You can review and change your Federal and State tax withholding information by accessing the MyPack Portal, Employee Self Service, Payroll and Compensation, NC4/W4 Tax application.
Social Security/Medicare taxable earnings are the total salary plus non-wage compensation, reduced by "pre-tax" deductions for dental, health, and vision insurance, Unum AD&D, dependent care, flexible medical savings account, supplemental medical plan and pre-taxed parking.
- Social Security and Medicare
- Social Security Tax or Old Age, Survivors and Disability Insurance (OASDI)
- Withheld at a flat 6.2% of taxable gross
- Maximum wage base of $102,000 in 2008.
- Medicare or Hospital Insurance (HI)
- Flat 1.45% of taxable gross with no wage limit
Social Security and Medicare taxes are known collectively as FICA (the Federal Insurance Contributions Act).
Exemptions from FICA withholding
- Federal employees are exempt from social security taxes, but subject to Medicare taxes
- Students with F-1 and J-1 visas in nonresident tax status are exempt for five (5) years
- Researchers with J-1 visas in nonresident tax status are exempt for two (2) years
- Students enrolled at least half time credit hours in the current semester and working less than 30 hours per week
- Undergraduates:
- Enrolled 6 credit hours or more in the fall/spring semesters
- Enrolled 3 credit hours or more in each summer session
- Graduates
- Enrolled 3 credit hours or more in the fall/spring semesters
- Enrolled 1 credit hour or more in each summer session
- Graduates and Undergraduates enrolled in 10-week summer courses are exempt in both summer sessions.
Anyone exempted from social security taxes
- Is not eligible to apply for unemployment benefits and
- Is not eligible to receive social security service credit toward retirement for that time worked.
