Federal Taxes

This page describes the federal taxes, such as Income, Social Security, and Medicare taxes, withheld from employee paychecks. Use the Table of Contents button to the right to jump to a topic.

Federal Income Tax

Indiana University uses an annualized method to calculate Federal taxes on each paycheck based on the Federal Form W-4 received. For most employees, this method shows little to no difference than the other methods as prescribed by the IRS for tax withholding.

Update your federal withholding in the Employee Center task tile in One.IU. We encourage staff to use the Paycheck Modeler or Savings Tool to calculate your potential take-home pay based on changes to tax withholding and other scenarios.

Individuals receiving contract pay, such as graduate students, may end up with little to no taxes withheld from their pay based on the annualized method. Consider adding additional withholding to your Form W-4 to avoid owing taxes when you file your income tax return.

 

Social Security and Medicare Taxes

Social Security and Medicare, referred to together as FICA, taxes are required to be withheld for all employees who do not meet the student or non-resident alien exemption for FICA taxes. To be exempt as a student, the individual must enrolled in a certain number of credits. The table below states the number of credit hours needed to meet the exemption:

Type of Student Fall Semester Spring Semester Summer Session
Undergraduate 6 credit hours 6 credit hours 3 credit hours
Graduate 4 credit hours 4 credit hours 2 credit hours

Note there is no wage limit for Medicare taxes and all non-exempt wages will have Medicare taxes applied. The following table states the current tax rate for Social Security and Medicare taxes.

FICA Component Tax Rate
Social Security 6.20%
Medicare 1.45%

Starting in 2013, an additional 0.9% Medicare tax is withheld from wages paid to an employee in excess of $200,000. For more information, please see the IRS Additional Medicare Tax page.