Special announcement: One-time merit payment payroll treatment

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(Nov. 2, 2010)--This announcement applies to all UTSA employees receiving a One-Time Merit Payment that is scheduled for a December 7 payday.

The One-Time Merit Payment will be paid December 7 regardless of the employee's regular payday. Due to the nature of the One-Time Merit, there are some special regulations and treatment that apply to this unique payment.

 

Payment Treatment

First, normal Social Security and Medicare taxes will apply and will be deducted.

Second, retirement contributions are applicable and will be deducted. Your retirement contribution will occur if you have either TRS or ORP.

Third, a One-Time Merit Payment is classified as Supplemental Pay. Per the IRS, Supplemental Pay has a special taxation rate for federal income tax withholding of 25 percent, also known as the Supplemental Tax Rate. The Supplemental Tax Rate is a flat percentage rate regardless of your tax status of Single, Married, Exempt or number of exemptions claimed.

The Supplemental Tax Rate is a withholding tax, and a withholding tax may be refundable. If your normal tax rate is higher or lower than the 25-percent tax rate, your normal tax return filing process will equalize your tax liability as in prior tax years.

 

Employee W-4 Option (100-percent voluntary)

As an option, employees can change their withholding tax amount for their December 1 paycheck to account for the Supplemental Tax Rate that will occur on the December 7 One-Time Merit Payment. Employees may make their withholding election changes up to November 15.

If you make a one-time change to your W-4 withholding selection for the December 1 payday, be sure that you revise your withholding income tax back to your normal selection prior to December 13.

The Payroll Office and UTSA will not be liable for late or non-submitted W-4 withholding forms. Employees accept all responsibility for the changes they make to adjust their W-4 withholding.

 

Questions

If you have questions regarding the amount of the One-Time Merit Payment or how they are determined, speak with your supervisor in your divisional area.

If you have any questions regarding the payment treatment information listed above, e-mail: payroll@utsa.edu

 

 

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