Employee Matters

This column is prepared by staff from the Office of Human Resources. E-mail questions to benefits@ohr.wisc.edu or call 262-5650. For more information, visit http://www.bussvc.wisc.edu/ecbs/ecbs.html.

Domestic tax issue

Employees must submit forms to the Office of Human Resources to renew three types of tax status: to claim the Advanced Earned Income Credit, the Minnesota Tax Reciprocity agreement and/or Federal Income Tax exempt status in 2008.

If you had a form on file during the previous calendar year, you will be sent a renewal notification. You must resubmit forms prior to the expiration date to keep the status intact. As most of these notifications are sent through e-mail, it is important to keep your e-mail addresses up to date in the payroll system.

Filing any of these forms is the responsibility of the person submitting the forms. The university does not make a determination if the employee qualifies for any associated benefits.

What is the Advanced Earned Income Credit?

This is an amount given to employees who qualify for the Earned Income Credit and elect to receive it before their tax filing period by having it added to their paychecks.

According to the IRS, “To receive part of the credit with your pay, you must expect to have at least one qualifying child for the current year, expect to fall within certain income limits and expect to meet certain other conditions. You cannot get the Advance EIC if you do not expect to have a qualifying child, even if you expect to be eligible to claim the EIC on your current year tax return. To see if you qualify, obtain the current year Form W-5, Earned Income Credit Advance Payment Certificate.”

The W-5 form expires at the end of each calendar year.

What are the state tax reciprocity agreements?

Wisconsin has tax reciprocity agreements with Minnesota, Michigan, Illinois, Indiana and Kentucky. Residents of these states, working in Wisconsin, who wish to invoke the Reciprocity Agreement should submit a W-4 form. Mark the appropriate box in the section “Non-Resident of Wisconsin” so that Wisconsin income tax will not be withheld.

In addition, Minnesota residents are required to complete Wisconsin form W-222 annually. This form expires at the end of January each year. Employees who do not resubmit on time will have Wisconsin income tax withheld using zero allowances.

What is Federal Income Tax Exempt Status?

According to the IRS, employees claiming exempt from federal income tax must comply with the following statement:

You can claim exemption from withholding for 2008 only if both of the following situations apply.

• For 2007 you had a right to a refund of all federal income tax withheld because you had no tax liability.
• For 2008 you expect a refund of all federal income tax withheld because you expect to have no tax liability.

This exemption is claimed on a W-4 form and must be reclaimed every year before Feb. 15. Employees who do not resubmit the exemption status on time will have federal income tax withheld using zero allowances.

Visit the Office of Human Resources Web site , or e-mail OHR for more information.