Purpose
To explain the change in methodology used to calculate withholding taxes for adjunct employees.
Background
The methodology for calculating withholding taxes for all State employees, including employees in adjunct positions, was changed when New York State converted to a new payroll system in 1998. The withholding methodology that was used upon conversion complied with Federal, State and Local regulations, but it generally resulted either in lower tax withholding amounts or no taxes being withheld at all. The new methodology will now calculate withholding taxes based on earnings in each paycheck, without regard to the contract period or the total amount earned over the contract period. It will also factor in the combined result of multiple contract payments. The new methodology will result in an increase in the amount of taxes withheld from the paychecks of employees in adjunct positions under contract pay.
Affected Employees
Employees appointed to adjunct positions under contract pay
Effective Date
Payroll checks dated February 6, 2003
Tax Withholding Methodology
The Percentage Method of Withholding for an Annual Payroll Period per IRS Publication 15 (Circular E, Employer's Tax Guide) will be used for federal tax calculations and the Annual Tax Rate Schedule per NYS Publication NYS-50 for the State, NY City and City of Yonkers taxes. Tax withholdings for employees in adjunct positions will now be calculated the same way as tax withholdings for employees receiving biweekly salary payments. Returning Adjunct employees will notice an increase in their withholding taxes as a result of this change.
Agency Actions
Notify adjunct employees receiving contract pay of the change to the tax withholding calculation methodology. These employees should review their current withholding status and submit a new W-4 for federal and an IT-2104 for State, NY City and Yonkers taxes if changes are requested.
Examples
Examples of the tax calculation methodology are attached to provide further clarification.
Questions
Questions regarding this bulletin may be directed to the University Manager of Payroll Systems and Operations at CUNY Central Office.