How to make Changes to your State Withholding

To change your state tax withholding, you have to complete a new W-4 form. This can be found at udel.edu/webforms. Login as you normally would, and go to the tab titled Blanks, and open the PAY W4 form. When you go to the second 'page' of the form, you will have the opportunity to change your selections for Delaware and/or your state of residence, as well as requesting an additional amount of state taxes to be withheld.

Pay stubs that Show that No Taxes are Withheld

Students

As a student enrolled in classes during the academic semester, you are automatically exempt from Social Security and Medicare (FICA) taxes.

Additionally, your federal and state income tax withholding is calculated using formulas set by the IRS and the State of Delaware. If your total earnings for a specific bi-weekly pay cycle are below a certain threshold—based on your W-4 elections—the formulas may determine that there are not sufficient taxable earnings to warrant income tax withholding.

Non-Students

If you are a non-student, the absence of withholding is typically due to your total taxable earnings for each pay cycle being relatively low.

Our payroll system uses the exact mathematical formulas provided by the IRS and the State of Delaware. These formulas factor in your W-4 elections (such as standard deductions and dependents claimed). If your earnings in any given bi-weekly or semi-monthly pay cycle do not exceed the threshold determined by these formulas, the system will accurately calculate zero income tax withholding.

Remote Work

For University employees working remotely in another state, earnings remain subject to Delaware state income tax withholding.

This is dictated by Delaware's income sourcing rules, which are similar to the "Convenience of the Employer" Rule:

1. Source of Income: Since the University is physically located in Delaware, and the employment is directed from Delaware, the income is considered to be Delaware-sourced.
2. Convenience Rule Application: Under this rule, if the employee is working remotely for their own convenience and not due to a necessary requirement mandated by the University, the employee's wages are still sourced to the employer's state (Delaware). Delaware therefore retains the legal right to tax these earnings.

It is critical to note that Delaware does not have tax reciprocity agreements with any other state (including Maryland, Pennsylvania, and New Jersey).

• The amount of tax you owe to your state of residence (e.g., Maryland) will not change based on the tax withheld for Delaware.
• The amount of tax withheld for Delaware will not change based on your tax obligation to your state of residence.

Employees living outside of Delaware will likely be required to file a non-resident return with Delaware and a resident return with their home state. Your resident state may offer a tax credit for taxes paid to Delaware to mitigate the risk of double taxation.

FICA (Federal Insurance Contributions Act) taxes and Social Security

FICA (Federal Insurance Contributions Act) taxes, which fund Social Security and Medicare, must be withheld from this employee's wages.

This obligation applies because the employee is currently receiving FICA-taxable wages. The requirement to withhold FICA taxes is based solely on the nature of the compensation being paid and is not affected by whether the employee is also receiving retirement or disability benefits.

Local Taxes

The payroll system utilized by the University is configured to withhold local taxes only for the city of Wilmington, Delaware as we are not required to withhold for any other local municipalities or jurisdictions.

If you are subject to local taxes in a different city or county (e.g., in Pennsylvania, Maryland, or another locality), you are responsible for calculating and remitting those local tax payments directly to the appropriate local tax authority.

If you move out of Wilmington, DE, submitting the demographic data form only updates your address in the University's internal systems; it does not automatically stop the withholding of Wilmington local tax.

To cease Wilmington tax withholding, you must complete and submit a new W-4 form.

Here are the specific steps to follow on the W-4 form:

1. Access the second page of the W-4 form.
2. Locate the small section designated for the City of Wilmington.
3. You will see two separate questions regarding your connection to the city. You must answer 'No' to both statements:
   • Do you live in Wilmington? $\rightarrow$ Answer 'No'
   • Do you work in Wilmington? $\rightarrow$ Answer 'No'

Submitting the updated W-4 with these selections is the only way to stop the Wilmington tax from being withheld from your paychecks.

Maryland and Pennsylvania Residents

Since your employment and work location remain within the State of Delaware, we are required to continue withholding Delaware state income taxes from your paychecks.

It is important to note that Delaware does not have reciprocal tax agreements with any other state. Consequently, changing your state of residence will not alter your obligation to have Delaware state taxes withheld while working here.

While the University offers the courtesy option to withhold Maryland and/or Pennsylvania state taxes for residents of those states, this withholding is not legally required by the State of Delaware. This option is extended solely to help residents of those states manage their state tax obligations more conveniently throughout the year.

If you are a resident of Maryland or Pennsylvania, you should ensure you are meeting all necessary non-resident filing requirements for Delaware and resident filing requirements for your home state.

The withholding of Maryland taxes does not stop automatically when you change your residence from Maryland to Delaware by completing the HR Employee Demographic Data form,. In order to stop the withholding of Maryland taxes, you must submit a new W-4 form and indicate that you now  live in Delaware.

New Jersey Residents

Currently, the payroll system used by the university is not set up to withhold state taxes for New Jersey. Any UD employees who reside in the state of New Jersey must pay their state taxes independently.