Recent federal legislation was enacted that may impact some employees. President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 on December 17, 2010. This legislation impacts employees by:
Tax Withholding: All employees at the University may see some change in tax withholding. This new Act continues the Bush-era tax rates, which had been set to expire on December 31, 2010, for two years, through December 31, 2012. This continuation is intended to prevent a sharp increase in income tax withholding for most employees. However, the "Making Work Pay" tax credit is no longer available in 2011. As a result, employees may notice an increase in tax withholding.
Social Security: This Act decreases the Social Security withholding rate. Most employees at the University do not have Social Security withholding. However if you are Academic Hourly, Extra Help, or working in a Student job (if not registered for at least ½ time), which includes Student Employment, Graduate Hourly, and Graduate Assistantships, then your Social Security withholding will decrease. This new act reduces the Social Security withholding tax rate paid by employees from 6.2% to 4.2% for wages paid in 2011. This will result in an additional 2% of earnings in your net pay beginning January 1, 2011.
Educational Assistance (IRS Section 127): This provision, currently in effect, had been set to expire on December 31, 2010. The new Act extends this provision for two years (through 2012). The Educational Assistance provision provides for an exclusion from income for employer provided education assistance (tuition waiver) up to $5,250 per calendar year for graduate level courses. Note: This does not apply to teaching and research assistants, as their graduate level education is excluded under a different section of the Internal Revenue Code, which remains unchanged.
If you have any questions, please contact University Payroll and Benefits at:
Chicago 312-996-7200
Urbana 217-265-6363
Springfield 217-206-7211
Or by email at payinq@uillinois.edu
This notice is provided as a source of information and does not constitute tax or other professional advice. If tax advice or other professional assistance is required, the services of a professional advisor should be sought.
