W-2 Information

By January 31, 2008 you will receive your 2007 W-2 Form. The layout of this year’s W-2 Form will be the same as last year’s. The W-2 Form will be a 4 up-horizontal mailer, folded and pressure sealed. This letter explains the content of the form.

Address

This year all Wage and Tax Statements (W-2 Forms) will be sent to the same check address that was used for paycheck distribution. In most cases, this will be the department’s address. For individuals who have separated from the University, their W2 will be sent to their home.

Name

The Social Security Administration and the Internal Revenue Service compares your Social Security Name (listed on your Social Security Card) with the name that is reported on the W-2 Form. For each mismatch, they will fine the University $50.00. If you change your name at the Social Security Administration, you must change your name in the Human Resources Information System (HRIS). You can do this by submitting a Personal Data Form with a copy of your new Social Security Card to the Payroll Office.

INFORMATION INCLUDED ON W-2 FORM

Wages, Tips, and Other Compensation (Box 1)

This is the portion of gross pay that is subject to federal income tax. This box consists of the following components: gross wages, prizes, awards, non-cash compensation, non-qualified moving expenses and automobile expenses (taxable information sent under separate letter), plus other compensation (see explanation in box 12c), less employee contributions to University health insurance, dental insurance, vision insurance, Flexible Spending Account (FSA), Health Spending Account (HSA), Health Savings Account (HSA), 403(b) retirement plan contributions, 457(b) deferred compensation plan contributions and parking and transit deductions.

Under Section 125 of the Internal Revenue Code (IRC), health insurance premiums, dental insurance premiums, vision insurance premiums, contributions to our FSA, HSA, and parking and transit deductions may be excluded from taxability.

Other Compensation is the imputed value of life insurance provided to the employee in excess of $50,000.

Federal Income Tax Withheld (Box 2)

This box shows the amount of Federal Income Tax withheld from your "Wages, Tips and Other Compensation" listed in Box 1 or if you elected additional withholdings from your scholarship payments.

Social Security Wages (Box 3)

Social Security Wages is the amount of pay that is subject to social security tax. The 2007 maximum social security wage base was $97,500. Social Security Wages consist of the following components: gross pay plus other compensation (value of group life insurance in excess of $50,000; items indicated in box 13), non-cash compensation, less employee contributions to University health insurance, dental insurance, vision insurance, Flexible Spending Account (FSA), Health Spending Account (HSA), and parking and transit deductions. Retirement contributions are not excluded from Social Security Tax or Medicare Tax.

Social Security Tax Withheld (Box 4)

In 2007, the Social Security Tax rate was 6.2%, which was withheld on the first $97,500 of taxable earnings. The maximum amount of Social Security Tax an employee must pay was $6,045. If an employee works for more than one employer during the year and had more than $6,045 withheld, the excess can be claimed on the individual’s tax return (Form 1040). The employer’s matching contribution is not recoverable.

Medicare Wages and Tips (Box 5)

Medicare Wages and Tips is the amount of pay that is subject to Medicare Tax. It consists of the same components as Social Security Wages (see above). There is no maximum wage amount on which Medicare Tax is applied.

Medicare Tax Withheld (Box 6)

In 2007, the Medicare Tax rate was 1.45%, which was withheld on the total Medicare Wages as explained above. There is no maximum to the amount of Medicare Tax an employee must pay.

Advanced EIC Payments (Box 9)

This box shows the total amount paid to the employee as advanced Earned Income Credit (EIC) payments. To qualify for advanced Earned Income Credit in 2007, if you have one qualifying child your wages must be less than $33,241 ($35,241 if married filing jointly) or $37,783 ($39,783 if married filing jointly) with more than one qualifying child.

If you do not have a qualifying child, you can receive the credit if your income was less than $12,590 ($14,590 if married filing jointly).

2008 Earned Income Credit figures will be available within the month. Please contact the Payroll Office for the 2008 figures.

Dependent Care (Box 10)

This box shows the total amount of dependent care benefits under the dependent care assistance plan account (FSA).

Box 12
This box is used to report several items each identified with a separate code.

Code C
Value of basic term life insurance in excess of $50,000.00 provided by Northwestern University is considered “other compensation”. This amount is included in Box 1, “Wages, Tips, and Other Compensation”, Box 3, “Social Security Wages”, Box 5, “Medicare Wages and Tips”, and in Box 16, "State Wages, Tips, Etc.".

Code E
Employee contributions to University 403(b) tax deferred retirement plans. This amount is NOT included in Box 1, “Wages, Tips and Other Compensation” or in Box 16, “State Wages, Tips, Etc.”, but is included in Box 3, “Social Security Wages” and Box 5, “Medicare Wages and Tips”.

Code J
Long term disability payments made by the insurance company. This amount is NOT included in Box 1, “Wages, Tips, and Other Compensation”, Box 3, “Social Security Wages”, Box 5, “Medicare Wages and Tips”, or Box 16 “State Wages, Tips, Etc.”.

Code P
Excludable moving expense reimbursements are treated as excludable fringe benefits if (1) the expenses would have been deducted by the employee if the employee paid them and (2) the employee did not deduct the expenses in a prior year. Excludable moving expenses are not reported in Boxes 1, 3, or 5 or 16 of the W-2 Form.

State Wages, Tips, Etc. (Box 16)

Northwestern University reports wages to the State of Illinois, Maryland, New York, Wisconsin, and the District of Columbia (Washington DC). If you are a resident of another state and are subject to income tax, it is your responsibility to file the appropriate tax returns with that state. For Illinois, Maryland, New York, Wisconsin and the District of Columbia, the same payments that are subject to federal income tax are also subject to state income tax.

State Income Tax (Box 17)

Illinois income tax is a flat 3% of taxable earnings less withholding allowances. The District of Columbia, Maryland and Wisconsin use a table of rates graduated to the employee’s income.

Mailing of 2007 W-2

Your 2007 W-2 Forms will be in the mail by January 26, 2008. If you need to visit your tax accountant prior to the issuance of the forms, you may use your December 21, 2007 biweekly paycheck or December 28, 2007 monthly paycheck, which can be printed via HRIS Self Service at: https://nuhr.northwestern.edu. Also, if there is a possibility that contributions to your retirement plan exceed the maximum allowable, you should wait for your W-2 Form before visiting your tax accountant.

Every year we receive a number of requests for early issuance of the W-2 Forms. We regret that the forms cannot be issued earlier. Each year a number of last minute adjustments must be made prior to the printing of the forms.

If you have any questions, please call the Payroll Department at (847) 491-7362.