WAGES & EMPLOYMENT TAXES

To learn more about wages and employment taxes in the U.S., please click on the appropriate topic below.

 

It is very important to protect your earned wages and money, follow these tips to help keep your money safe. Do NOT keep large sums of money on your person or at your housing. If you do not have a company pay card or cannot keep your money safe, you should open a checking or savings bank account. Search different banks in the area to find one that offers free student accounts and may not need a social security number right away to open it. If you receive a debit card when you open your account, do not share your PIN with anyone and keep your card in a safe place with you at all times.

You can find a list of local banks by clicking here.

 

WAGE INFORMATION

WHAT IS A WAGE?


A wage is payment or compensation earned by an employee for work performed under an employer’s direction, or with the employer’s knowledge or consent. Generally, wages are paid as currency (U.S. Dollars) representing a length of time worked. Minimum Wage: Wisconsin Law is $7.25 per hour for non-tipped employees. Tipped Employees: Payment of Less than Minimum Wage This amount may be no less than $2.33 per hour provided that earned tips for the week combined with the $2.33 per hour are equal at least to the minimum wage $7.25 for all hours worked. Where an employee’s earnings fall short of the minimum wage due to meager tips, the employer must make up the difference. Compensable Time: For What Time Must an Employee Be Paid? All of the time an employer requires an employee to be at work is compensable time, whether or not the employee is officially “on the clock.” Overtime: Overtime is payment to an employee of one and one-half (1.5) times the regular hourly wage for work performed in excess of 40 hours in a 7-day work week. However, under state and federal law, some employers are exempt from the requirement to pay overtime.




PAYMENT OF WAGES


Frequency of Pay: Employees in Wisconsin must be paid at least once every two weeks or twice per month. Wages Paid On Time: Generally, an employer must set regular paydays, and pay all earned wages of an employee on time regardless of whether the employee has turned in a time sheet or punch card, quit without notice, or provided any other form or document required by the employer. Wage Payment at Termination: When Final Pay Due Each employer shall pay an employee, or authorized representative of an employee, all wages due for work that the employee performed before the termination of employment, on or before the day on which the employee would have been paid the wages if the employment had not terminated (the next scheduled payday.) Holding Wages: “One Pay in the Hole” An employer may not keep any part of the wage of an employee, either by withholding an entire paycheck, part of a paycheck, or by way of incremental wage deductions from several paychecks, as security against some future or contingent occurrence. This practice amounts to a confiscation of pay and is a direct violation of the law requiring timely payment of earned wages. (Note: This section concerns the indefinite holding of wages as security, not the short-term delay of pay for payroll processing.) Bounced Paychecks: Paying wages with a bad check is the same as failing to pay wages and may subject an employer to civil and criminal penalties.




ADDITIONAL INFO ON WAGES


Where to Find Help: The Department of Labor’s web site is www.dol.gov The State of Wisconsin’s Dept. of Workforce Development web site is dwd.wisconsin.gov





Taxes can change from year to year, so please reference the website: www.irs.gov and/or your sponsor’s information on taxes to be sure you have the most current information.

EMPLOYMENT TAX INFORMATION

WHAT TO KNOW ABOUT TAXES


All summer work/travel participants must pay state, federal and local taxes (approximately 10-14%). However, you have the right and opportunity to complete forms obtained from the Internal Revenue Service (IRS) so that you can get most of the taxes refunded to you at the end of the tax (calendar) year that you worked. Taxes exchange students will not have to pay: Social Security Medicare Federal Unemployment After receiving your first paycheck, make sure the three above taxes have not been taken out of your paycheck. If you see any deductions under words “FICA”, “SS” or “Soc Sec”, or “Medicare” or “Med”, or “FUTA”, then the employer has made a mistake. You should speak to the employer about this since the law is different for exchange students and the employer may be unaware that you are exempt from these three taxes. Go to www.irs.gov for IRS Publication 519 which explains this exemption.




W-4 FORM


When you begin your job, the employer will ask you to complete a W-4 Form (Employee’s Withholding Allowance Certificate) to ensure that you are not overtaxed. If you do not fill out the W-4 properly, you may have to pay more tax in the future. The following instructions on filling out your W-4 Form are from the IRS Publication 515, “Withholding of Tax on Nonresident Aliens and Foreign Corporations.”

  • Check only “single” marital status on Line 3 (even if you are married or divorced).
  • Claim only one withholding allowance on Line 5.
  • Write “Nonresident Alien” or “NRA” on the dotted line on Line 6.
  • Do not claim “Exempt” withholding status on Line 7.




TAX REFUNDS


Everyone who earns income in the U.S. is required to file a tax return after the end of the calendar year. Your tax return will reflect your earnings for the previous year, the amount of taxes you paid and the total amount of taxes owed or refunded. To file your tax return you will need your W-2 Form and Form 1040NR-EZ. At the beginning of the year following your summer work/travel program, your employer will send you a W-2 Form (employers are required by law to mail it to you by January 31). Make sure you provide your employer with your correct address in your home country before you leave the U.S. so that they can mail the W-2 Form to you. After you receive your W-2 Form, complete a 1040NR-EZ tax form. You can obtain the 1040NR-EZ form (with instructions) at the U.S. Embassy in your home country or on the Internet at www.irs.gov. You must file your tax return no later than April 15. Once you have completed the form, mail it to: United States Internal Revenue Service Center Austin, TX 73301-0215 USA The IRS office in Philadelphia provides international tax assistance: (267) 941-1000 (not toll-free) Fax: (267) 941-1055 Phone service available from: 6:00 am to 11:00 pm (EST) M-F





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