Northeast Data is legally required to withhold income tax and Social Security (FICA) from employee paychecks. Additionally, several voluntary deductions are available for employees.
Federal and state income taxes are mandatory deductions. Taxes are withheld based on gross pay and the number of exemptions claimed on the employee’s W-4 form. Until a W-4 is submitted, the maximum deduction will be withheld.
Example: If an employee earns $2,000 per paycheck and claims 2 exemptions, the federal and state taxes will be calculated based on these details. If no W-4 is submitted, taxes will be withheld at the highest rate.
To change exemptions, submit a new W-4 to Payroll. W-4 forms are available from the Operations Department.
Federal law mandates Social Security deductions. A percentage of pay, as specified by the Social Security Act, is withheld from each paycheck. Northeast Data matches this contribution for future Social Security benefits.
Example: If the Social Security rate is 6.2%, an employee earning $2,000 per paycheck will have $124 withheld for Social Security. Northeast Data will contribute an additional $124.
Accurate Social Security numbers are essential for recording contributions. Contact the Operations Department to correct any discrepancies.
Group Insurance and 401K Plans
Employee premiums for group insurance and contributions to the optional 401K plan are deducted from paychecks upon completion of the necessary forms, available from the Operations Department.
Example: If an employee opts for health insurance with a premium of $100 per paycheck and contributes 5% of their salary to a 401K plan, these amounts will be deducted from their gross pay.
Payroll Deduction Form: All voluntary deductions require a Payroll Deduction form, which details the deduction amount. Employees must sign this form before the deduction occurs.
Example: Before deductions for a new health insurance plan begin, the employee will receive a Payroll Deduction form showing the $100 premium. The employee must sign this form to authorize the deduction.
Northeast Data must honor garnishments, wage assignments, and levies as required by law.
Garnishments Authorized garnishments require withholding pay based on a legal formula. The Operations Department notifies affected employees and specifies the deadline to present a release of garnishment. Only one garnishment per pay period is processed, prioritizing the earliest received.
Example: If an employee’s wages are garnished for child support, a portion of their paycheck will be withheld according to the court order. If another garnishment is received, it will be processed in the next pay period.
Wage Assignments Authorized wage assignments require withholding a specific amount from consecutive pay periods until the debt is paid or a release is received. Employees must contact the relevant government agency to contest a wage assignment.
Example: If an employee has a wage assignment for a loan repayment of $50 per paycheck, this amount will be deducted until the loan is paid off or a release is provided.
Levies Authorized levies require specified withholdings for particular pay periods, processed in compliance with federal or state laws.
Example: If the IRS issues a levy for unpaid taxes, a specified amount will be withheld from the employee’s paycheck for the duration stated in the levy.
Disagreement with Policy If an employee disagrees with any aspect of this policy, they should:
Request a Review: If the disagreement is significant, request a formal review of the policy by the Human Resources Department. This review will consider the employee’s concerns and determine if any policy adjustments are necessary.
Example: If an employee believes the policy on garnishments is too restrictive, they can discuss their concerns with Payroll, provide written feedback to HR, and request a formal review to potentially amend the policy.
Questions or Issues with Wage Assignments / Garnishments / Levies If an employee has questions or issues with wage assignments, garnishments, or levies, they should:
Provide a Discontinuance Letter: If the governing body stops the wage assignment, garnishment, or levy, the employee must obtain a discontinuance letter from the agency and submit it to the Human Resources Department.
Example: If an employee disputes a garnishment for unpaid taxes, they should contact the IRS to resolve the issue. If the IRS agrees to stop the garnishment, the employee must provide a discontinuance letter to HR to halt the deductions.
Note: Northeast Data, Inc. reserves the right to modify this policy at any time.
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