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Changes in income tax withholding announced by IRS

On the Web:

IRS Withholding Calculator

IRS Publication 919, “How Do I Adjust My Tax Withholding?”

Still have questions?

Contact University Payroll at 866-476-3586, 265-6363 or payinq@uillinois.edu.


The IRS has issued new tax tables to reduce federal tax withholding required by the new economic stimulus law, officially known as the American Recovery and Reinvestment Act of 2009. For 2009 and 2010, the Making Work Pay provision of the stimulus bill provides a reduction in withholding of $400 for those claiming single on the Form W-4, and $600 for those claiming married on Form W-4.

The new tables will be effective with payrolls paid in April. Eligible university employees will get the benefit of the reduced withholding without any action on their part. The new tax tables will adjust the withholding automatically.

However, there may be situations where taxes will be under-withheld if no action is taken:

If an individual works for more than one employer the new tax tables will provide the reduced withholding for both employers. This would reduce the withholding by more than what an individual would be entitled.

Married couples with both spouses working and claiming married on the Form W-4 also will see the reduction in withholding for both spouses. This would reduce the withholding by more than what the married couple would be entitled.

Individuals claimed as a dependent on another individual’s tax return are not eligible for the reduced withholding.  The reduction is automatic and could result in under-withholding for the year.

Nonresident aliens are not entitled to the reduced withholding. The calculations are adjusted so that the reduction is not applied to most nonresident alien withholding. However, the calculation adjustment does not apply to students and business apprentices from India. Individuals in this category may be under-withheld in their taxes for the year. 

In the situations described above, if you want to make sure the appropriate withholding is applied, you need to file a new Form W-4. You may claim fewer withholding allowances on line 5 or request additional amounts to be withheld on line 6.

If you are unsure what you should submit on the Form W-4, you can use the IRS Withholding Calculator to determine what you would need to claim so that you do not owe taxes at the end of the year. 

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