W-4 & MW507 – Employee Withholding Allowance Certificate
In the absence of a W-4, the federal and state tax laws and regulations mandate maximum taxes be withheld.
The law requires that you complete an Employee’s Withholding Certificate (W-4) so that your employer, the State of Maryland, can withhold federal (W-4) and state income tax (MW507) from your pay. The employee must use an original form with black ink. The employee must complete the form. The payroll preparer may not advise an employee on what to claim on their W-4 and should only instruct them on the correct way to complete the form to avoid administrative errors that would cause the form to be rejected by Central Payroll Bureau.
Prompt filing of the Employee Withholding Certificate “Form W-4” is to the advantage of all employees. In the absence of the appropriate tax forms, the federal and state taxes are set at “max tax withholding” according to federal and state tax laws and regulations. Upon receiving the W-4/MW507 the withholding status will be changed for future pays. Any overpayment of taxes is refunded to the employee when they file their taxes for that year.
You may update your W-4 via the Payroll Online Service Center or the paper W-4 form below. If you are a current employee and do not already have an account, follow the POSC Set-up Instructions to create an account. Learn more about POSC and how to set-up an account. If you would like to file exempt for either Federal or State withholdings, follow the instructions below.
If the W-4/MW507 has not be submitted or was submitted in error, the employee’s tax status will be established at the default withholding until a new W-4/MW507 is submitted. Prompt Filing of Employee Withholding Certificate
If you have previously filed as “exempt” from federal and/or state withholding, you must file a new W-4 annually. Annual W-4 tax filing is required for ALL employees that claim exempt state and/or federal taxes. Employees who claimed exempt for Federal and/or State income tax withholding must file a paper version annually if they wish to remain exempt in the next calendar year. Employees claiming exempt cannot use the Payroll Online Service Center (POSC). If an employee is claiming exempt because they live in PA or VA, they DO NOT need to re-file unless they have changed their W-4 via the POSC.
If a new W-4 is not submitted in time, the employee’s tax withholding will be set to the default withholding until a new W-4 is submitted. (CPB memo on Filing Exempt Annually) IRS regulations require Central Payroll Bureau (CPB) to revert back to the “max tax” for individuals currently claiming exempt but do not re-file. Employees changing from exempt to taxable also need to complete a new W-4 so they will be taxed according to their designation and not automatically “max taxed”.
Federal and/or State Tax Withholding Changes
Employees are reminded that changes to already existing W-4 information may be submitted electronically via the Payroll Online Service Center (POSC) in most cases. An employee may not claim tax exempt via the POSC and this must be done via a paper W-4/MW507.
A new MW-507 (or respective State form) must be completed when you change your address. If you live in Virginia or Pennsylvania, you are responsible for your own “state” taxes as Central Payroll Bureau does not have reciprocity with these states.
GUIDE TO COMPLETING THE W-4 & MW507 – This guide address common questions and errors employee’s have when completing the W-4 and MW507 forms.
MORE INFORMATION ABOUT THE W-4: IRS Frequently Asked Questions
Student employees (Student/Graduate employee classifications) will be FICA exempt if they are enrolled in classes at least half time basis (6 credits) as of day 10 for the Fall and/or Spring semester or in a taxable F-1 or J-1 VISA status. Human Resources – Payroll runs an automated program to evaluate and adjust FICA exemption based on class enrollment/credits. The FICA status for the winter period is based on the Fall course enrollment. Since summer semester has multiple mini-semesters, the program evaluates FICA exemption based on the active mini-semester(s) in the corresponding pay period which must be at least half time (3 credits).
If an employee enrolled in a class after the FICA program was run for that period, they will be exempt in the following program run.
W-2 – Wage and Tax Statement
The Internal Revenue Service (IRS) and the State Income Tax Division require earnings statements to be based on the total amount of payroll checks actually received (gross earnings) and withholdings for the employee for the period January 1 through December 31. These statements are called W-2s.
W-2s are mailed out by Central Payroll Bureau (CPB) each year no later than January 31st. The W2 will be sent to the address that is displayed on the employee’s check. It may be updated by completing a new W-4 form or by submitting the information on the electronic W-4 form through the employee’s Payroll Online Service Center (POSC) account.
If you have not received your W-2 you may access it via your POSC account or request a duplicate W-2 from Central Payroll Bureau. The Payroll Online Service Center (POSC) allows employees to review and print online paychecks, year-to-date pay history and W-2s. Learn more about POSC and how to set up an account. You may also access the latest 3 years of W-2 statements through your Payroll Online Service Center account.
If you have questions about how to read your W-2 and how to reconcile it with your year end pay stub, you can learn more about it in the Your 2022 W-2 & What You Need to Know guide.
The most up-to-date memos relating to W-4, W-2 and other tax related information may be found on the Comptroller of Maryland’s website.
Terminated employees may access your W-2 via the Payroll Online Service Center if they have an account created within 8 weeks of their last pay. Otherwise, a duplicate W-2 may be requested from Central Payroll Bureau.
Year End Information
Canceled checks and overpayment recoveries must be processed prior to the year-end closing deadline which is determined by Central Payroll Bureau each year. Any transactions processed after the deadline will not be reflected on the W-2 statement. A corrected W-2 statement will need to be requested for these employees.
Other Documents for Year End Tax Filing
- 1042S – If you are claiming a tax exemption due to a tax treaty (regardless of tax status) OR you received a scholarship/fellowship (non-qualified taxable scholarship or any amount received for incidental expenses or by a non-degree candidate are taxable scholarships. Incidental expenses include room and board, travel, and expenses for equipment and other items that are not required for either enrollment or for attendance, or in a course of instruction):
- You will be sent a 1042S form (March 15)
- The 1042S will be postmarked no later than March 15 and is generated from the Maryland Comptroller of the Treasury Central Payroll Bureau.
- 1095 – The 1095 forms are mailed by the State Employee Benefits Division to employees’ home addresses. Employees do NOT need this form in order to file their taxes. More information can be found on the IRS website.
- 1098-T – Student Business Service handles questions relating to the 1098-T. Students can access (view and print) their 1098-Ts electronically via myUMBC and they are mailed by January 31st each year.
Tools & Resources
Net Pay Calculator – The net pay calculator can be used for estimating taxes and net pay. Before using, please have a copy of your pay stub for reference.
Payroll Online Service Center (POSC) allows employees to review and print online pay checks, year-to-date pay history and W-2s. You may also manage your W-4 and change your address with your POSC account.
Comptroller of Maryland – State Employee Information relating to Payroll topics (W-2, direct deposit and W-4 tax withholding)
2018 Federal Tax Memo from Central Payroll Bureau (1/16/18 memo)- “State employee’s should see the new calculations of their federal taxes on January 26, 2018.” You may log in to the POSC on January 24th to get a preview of your net pay before check day.
2018 Payroll Tax Changes effective January 1st (1/31/18 memo)
Employee State Payroll Services (Note: We are considered University of Maryland Employees, holidays and payroll processes may differ.)