Understanding Your Pay Statement

In the Hours and Earnings section of your pay statement, you may see some of these line items listed in the Description column:

3rd Party Disability: Disability payments made by a third-party, both taxable and nontaxable. These must be reported on Form W-2 by the University, along with federal taxes that have been withheld from these payments.

Academic Disability Leave: Supplemental payment to eligible faculty and P&A employees on approved disability leave. To be used only as directed by Office of Human Resources.

Additional Instruction: Payment for providing instructional or other services for independent study, evening/weekend credit programs, non-credit programs, and Continuing Education.

Additional Regular Pay: Additional regular pay in lieu of cell phone allowance for those eligible employees in bargaining units, UEA faculty, professional-in-training categories, as well as civil service and P&A employees at their max.

Adjustment Earnings: Previous overpayment that is deducted from later earnings.

Apparel Allowance Benefit: Merchandise credit that allows certain employees to buy clothes and goods directly from an outside vendor.

Athletic Contract Supplement: Supplemental payment to eligible faculty and Professional & Administrative employees to cover expenses for media, apparel, etc. These earnings are subject to supplemental tax withholding.

Augmentation: Payment for services in addition to regular job duties. This includes honorary chairs and other related non-service duties. This code can only be used if employee also has regular pay.

Augmentation Retro: Payment to temp/casual appointees for the difference between the old and new compensation rate for augmentation when an increase is applied retroactively.

Bonus/Commission: Payment related to established University policy on bonuses and commissions, contract implementation, or agreed-upon hiring or retention offers. These earnings are subject to supplemental tax withholding.

Call Back Overtime: Premium payment for hours worked due to an emergency, as specified in a contract or rule book.

Car Allowance: Payment for using a personal vehicle for University business, in lieu of providing a University automobile. Paid only to key employees, as determined by the Office of the President.

Car Leasing Benefit: Value of personal use of a University-provided vehicle. Restricted to Wheel Club.

Career Bonus/Stability: Payment to eligible employees in Bargaining Unit 4 (AFSCME) or Bargaining Unit 3 (Teamsters) made once a year based on hours of service.

Club Membership Benefit: University-paid club memberships and related expenses that are not for a bona-fide University business purpose.

Commutation - UMN: Payments to physicians in company University of Minnesota. Eligible for Faculty Retirement Plan-covered salary.

Commutation - UMP: Payments to physicians in company University of Minnesota Physicians. Not eligible for Faculty Retirement Plan-covered salary.

Compensatory Time Payout: Payment for any balance in the Compensation Leave Plan due to termination or department transfer per contract or rule book.

Contract Supplemental Comp: Supplemental compensation as agreed to in a contract.

Extended Day Meal Allowance: Supplemental payment for employees who must regularly eat meals on University business outside of normal business hours.

Fellowship/Scholarship: Payments to students and scholars on non-service appointments made separate from any wages being paid for services. These are non-qualified payments for scholarships or fellowships. Note: See IRS publication 520 for definition of non-qualified amounts.

Gift Certificate Benefit: Value of a gift certificate awarded to an employee.

Health Care Savings Plan Contribution: Unused vacation and compensatory time paid into a post-retirement health care account.

Holiday Worked: Premium payment at time-and-a-half the hourly rate for working on a University-designated holiday.

Holiday Worked-Double Time: Premium payment at twice the hourly rate for working on a University-designated holiday.

Housing Allowance: Payment to defray out-of-pocket housing costs, as stipulated in the employee contract.

Incentive: Incentive payments based on employment contracts.

Increment: Payment for educational, research, or administrative duties that require a formal, separate appointment. May be tied to non-recurring faculty compensation plan as defined by collegiate area.

Late Pay: Payment for hours worked from other than the immediately preceding pay period. This is taxed according to the IRS supplemental rate method.

Layoff Non-Renewal: Payment related to the layoff non-renewal severance agreements for civil service, bargaining unit, and professional & administrative staff. Note: refer to the Layoff Non-Renewal packet from Employee Benefits. These earnings are subject to supplemental tax withholding.

Leave Paid: Payment related to a paid leave of absence.

Medical Premium Relief Program: Medical Premium Relief grant program to provide assistance to lower-paid employees during a year of high increases in employee contributions to the UPlan Medical Program.

Military Leave Pay: Payments made while an employee is on active military leave.

Morse Alumni: Payments to recipients of the Morse Alumni Outstanding Contribution to Undergraduate Education Award; the Award for Outstanding contributions to Post-baccalaureate, Graduate and Professional Education; and the University of Minnesota Community Service Award.

Moving Expenses Non-Taxable: Employer-paid moving expenses that are qualified, or non-taxable (and reported as code P on Form W-2). For example: reimbursement of travel and lodging costs (excluding meals) while moving to a new home.

Moving Expenses Taxable Bene: Employer-paid moving expenses that are non-qualified (and subject to all withholding), whether paid to an employee or a third party. Examples: cost of meals while traveling, expenses of a house-hunting trip, and temporary living expenses.

Non-Qualified Dfd Comp: Payment for non-qualified deferred compensation. These earnings are subject to supplemental tax withholding.

Non-Recurring Lump Sum: Payment made as part of an annual salary plan, in lieu of a base salary increase.

On Call: Hourly pay to employees who are required to be available by phone or by returning to work if necessary. It can exceed 80 hours in a pay period. It is also used for quarterly payments (or adjustments) for service in an emergency room.

Outstanding Serv/Teach Award: Payment for outstanding performance (awarded according to a unit's established procedures).

Overload: Payment for professional activities, usually paid hourly or by lump sum, such as advising, consulting, article writing, course development/revision, translations, teaching, lectures, special task force/focus group, music lessons and performance fees, etc.

Overtime: Premium payment at one-and-a-half times the hourly rate for hours paid over 40 in a work week, or for designated employees who work more than eight hours a day.

Overtime Double Time: Premium payment at twice the hourly rate for hours paid over 40 in a work week, or for designated employees who work more than eight hours a day.

Overtime Double and Half: Premium payment for employees who are required to work on a recognized holiday, at two and a half times the hourly rate, starting with the 13th hour through the remaining holiday hours.

Overtime Double Time Retro: Payment for the difference between the old and new compensation rate when an increase is applied retroactively.

Overtime Retro: Payment for the difference between the old and new compensation rate when an increase is applied retroactively.

Phased Retirement: Payment related to phased retirement.

Police Longevity: Payment made each pay period to police officers based on years of service.

Previous Pay Period: Payment for regular hours worked, but not paid, in the immediately preceding pay period. Taxes are withheld at the annualized (W-4) rate.

Professional Activities Pay: Payment (hourly or by lump sum) for activities such as advising, consulting, article writing, course development or revision, translations, music lessons and performance fees, etc. Use this earnings type if it does not put the employee over 100% time. Use "Overload" earnings type if the activity will put the employee over 100% time.

Regents Professor: Payment to recipient of Regents Professor for outstanding contribution to both undergraduate and graduate education.

Regents/Acad Tuition Benefit: Value of University-paid tuition for: 1) credits taken by employee in a graduate degree program, or 2) if total tuition benefit exceeds $5,250 in a calendar year.

Regular Pay: Payment for base services performed on appointments equal to, or greater than, 20 standard hours a week. Note: See "Regular Pay <20" for regular pay when less than 20 standard hours per week.

Regular Pay <20 Hrs/Lieu Holiday: Payment for base services performed on appointments that are less than 20 standard hours a week, or straight time pay in lieu of holiday pay when the recognized holiday falls on an employee's regular scheduled day off. Sick and vacation time will not be earned. Note: see "Regular Pay" for regular pay when an employee works 20 or more standard hours per week.

Relocation Lump Sum: One-time lump sum paid to employees to help cover the costs of relocating themselves and their families.

Rent Benefit: Market value of University-provided housing or payment of housing costs where housing is determined to be a personal benefit.

Replacement Check: Replacement of a lost check or bank-returned funds. Replacement of checks that are scheduled to be escheated to the state.

Retirement Contribution: Refund of previous year's retirement contribution. These earnings may be subject to supplemental tax withholding.

Retro Pay: Payment for the difference between the old and new compensation rate when an increase is applied retroactively for the following types of earnings: Augmentation, Morse Alumni, Regular Pay, and Shift Pay. Note: for hours worked, but not paid, in a previous pay period, see "Previous Pay Period."

Retro Premium Duties: Payment for the difference between the old and new compensation rate for the following types of earnings, when an increase is applied retroactively: Additional Duties, Shift Regular, and Second Sunday.

Sabbatical/Entrepreneurial/Professional Development: Payment for faculty sabbatical or P&A extended professional development leave.

Season Ticket/Passes Benefit: Value of season tickets or passes to events that have no documented University business purpose.

Second Sunday: Premium payment for hours worked on the second consecutive Sunday.

Settlement Award: Payment from settlement award involving back pay that is not eligible for the Faculty Retirement Plan, but subject to all tax withholding. Processed through the Office of General Counsel.

Shift 2nd Sunday: Premium payment for work that is eligible for shift differential on the second consecutive Sunday.

Shift Overtime: Premium payment at one-and-a-half times the hourly shift differential rate for work that is eligible for shift differential, based on civil service rules or bargaining unit contract.

Shift Overtime Double: Premium payment at twice the hourly shift differential rate for work that is eligible for shift differential, based on civil service rules or bargaining unit contract.

Shift Pay - 3rd: Payment for work that is eligible for shift differential, at the third shift rate, based on civil service rules or bargaining unit contract.

Shift Regular: Payment for work that is eligible for shift differential based on civil service rules or bargaining unit contract.

Special Payment: Payment approved by the Office of Tax Reporting and Compliance that is miscellaneous and non-recurring but is not included in the Faculty Retirement Plan-covered salary. These earnings are subject to supplemental tax withholding.

Special Payment - UMP: Payment to physicians in company University of Minnesota Physicians (UMP) for miscellaneous purposes, including "Productivity Payment" and moving expenses.

Spousal Travel Benefit: University-paid travel for spouse of University official that serves no University business purpose.

Summer Research Elig FRP: Payment to non-A-base academic personnel for work outside base appointment term dates. It is included in Faculty Retirement Plan-covered salary.

Summer Research NE FRP: Payment to non-A-base academic personnel for work outside base appointment term dates. It is not included in Faculty Retirement Plan-covered salary.

Summer Session: Payment for providing instruction or other services related to summer session or intersession courses.

Taxable Benefit/Compensation: Miscellaneous taxable benefits or compensation paid by departments on behalf of employees.

Terminal Agreement: A non-recurring payment based on a terminal agreement. Refer to the Terminal Agreement packet from Employee Benefits. These earnings are subject to supplemental tax withholding.

Tool Allowance/Insurance: Payment for buying required tools and tool insurance. Usually applies only to bargaining Unit 3 (Teamsters).

UMP - Paid Leave: Payment related to a paid leave of absence for company University of Minnesota Physicians only.

Uniform Upkeep: Payment for maintaining uniforms. Made once a year, usually only to police officers.

Vacation Buy Down: Payment for decreasing an employee's vacation time that is at the maximum accrual when a vacation request is denied.

Vacation Cash Out: Payment for exchanging up to 40 hours of vacation time for pay once a year, at employee's request.

Vacation Payout: Payment for any balance in the Vacation Leave Plan due to termination, per contract or rule book. These earnings are subject to supplemental tax withholding.

Some fringe benefits provided by the University—such as cars, free tickets, and graduate-level tuition assistance—are subject to federal income, state income, Social Security, and Medicare tax rules. According to the IRS, all compensation paid to, or on behalf of, an employee is taxable, unless specifically excluded by IRS code. (On your pay statement, Taxable Fringe Benefits are not included in the Hours and Earnings section under Earnings or YTD Earnings. However, they are included in the Fed Taxable Gross, shown in the Totals section near the bottom of your pay statement.)

Here is a list of non-cash compensation or benefits the University has identified as taxable income, and which will be reported on your Form W-2.

Apparel Allowance Benefit: Value of a merchandise credit that allows certain employees to buy clothes and goods from an outside vendor

Car Leasing Benefit: Value of personal use of a University-provided vehicle

Club Membership Benefit: Value of University-paid club memberships and related expenditures that are not for a bona-fide University business purpose

Gift Certificate Benefit: Value of any gift certificates awarded to an employee. Also, see the University policy on Employee Recognition Awards. Follow the instructions on the Gift Card/Certificate Reporting Form (Excel) to submit taxable amounts to Payroll Services

Gross-up Definition: When a University department pays an employee's taxes, the amount paid is an employer-provided benefit. The taxes paid on the employee's behalf are taxable income to the employee. Each payment of taxes results in more wages and more taxes. The IRS has approved a procedure commonly known as "grossing-up" to calculate the gross payment the employee must receive when the employer pays the employee's taxes. The formula is based on the supplemental rates: Grossed-up amount of earnings = Desired payment amount divided by 100% minus total tax %. An example of grossing up a gift or prize with a value of $100: 163.67 = $100 / (100% - (25% + 6.25% + 6.2% + 1.45%)).

Moving Expenses Taxable Benefit: The value of employer-paid moving expenses that are subject to all withholding, whether paid to an employee or a third party. Examples: cost of meals while traveling, expenses of a house-hunting trip, and temporary living expenses. 

Rent Benefit: Market value of University-provided housing or payment of housing costs where housing is determined to be a personal benefit

Ticket/Passes Benefit: Value of season tickets or passes to events for which there is no University business purpose

Spousal Travel Benefit: Value of University-paid travel for spouse of University official when spouse's attendance serves no official University business purpose

Regents/Academic Tuition Benefit: Value of University-paid tuition for credits taken by employee in a graduate degree program, if total tuition benefit exceeds $5,250 in a calendar year

Taxable Benefit/Compensation: Value of miscellaneous taxable benefits or compensation paid by departments on behalf of employees

Before-tax deductions from your pay reduce your taxable wages. Some before-tax deductions will reduce your federal and state, or W-2, wages, while others will also reduce your Social Security and Medicare wages.

After-tax deductions do not reduce your taxable wages. They are taken only after taxes have been withheld from your taxable wages.

Your pay statement shows the type of deduction being withheld and how much is being deducted, both from the current pay period and the calendar year to date (YTD).

Types of Deductions

Before-tax Deductions

These deductions are not subject to federal and state income taxes:

• 457 Deferred Compensation Plan: Tax-deferred retirement savings and investment plan
• Faculty Retirement Plan: The required retirement plan for faculty and for Professional and Administrative employees
• Minnesota State Retirement System (MSRS): The required retirement plan for civil service and bargaining unit employees
• Local 880 Health & Welfare
• Optional Retirement Plan: Voluntary retirement savings and investment plan
• Public Employee Retirement Association (PERA): Required retirement plan for University of Minnesota Police Officers
• Thrift Savings Plan: A 401K plan for federal employees

These deductions not subject to federal and state income tax withholding, or to Social Security and Medicare withholding:

• Parking
• Metropass
• Medical
• Federal Medical
• Dental
• Flexible Spending Accounts:
  • Health Care Reimbursement
  • Dependent Care Reimbursement
  • University of Minnesota Physicians Medical Reimbursement
  • University of Minnesota Physicians Dependent Reimbursement

After-Tax Deductions

After-tax deductions include, but are not limited to:

• Union dues
• Life insurance
• Community Fund Drive
• Recreational sports permit
• Athletic tickets
• Disability insurance
• Long-term care insurance
• Northrop Dance Series
• Garnishments (see below)

For more information about a particular deduction, contact the appropriate area, such as Employee Benefits, Parking and Transportation Services, Recreational Sports, Department of Athletics, or Northrup Concerts & Lectures. For information about Community Fund Drive deductions, contact Payroll Services.

Garnishments

Garnishments are court-ordered deductions from an employee's pay. Payroll Services is required to make deductions to satisfy a child support order, tax debt, or court judgment. The most common types of garnishments are:

• Creditor garnishment: A legal order to withhold part of an employee's wages to satisfy a debt to a creditor
• Child support withholding: A withholding due to a child support order from a court or state child support enforcement agency
• Tax levy: A deduction to satisfy a federal or state tax debt. Tax levies must be withheld before all other garnishment orders except child support.
• Bankruptcy orders: These garnishments, issued under Chapter XIII of the Bankruptcy Act, take priority over other wage claims, including tax levies and child support orders received before the bankruptcy. All other garnishments are stopped because the trustee will pay them under the bankruptcy order.
• Student loans: In 1991, Congress allowed garnishment of wages to repay delinquent student loans from the Federal Family Education Loan Program or Guaranteed Student Loan Program. Child support orders take priority over student loan garnishments.

Your federal taxable gross is shown in the Totals section near the bottom of your pay statement. It is the amount that will show in Box 1 on your W-2. Your federal taxable wages are determined by the following calculation.

1. Start with Total Gross (Totals section)

2. Add Taxable Fringe Benefits (Hours and Earnings section)

• Taxable fringe benefits are not included in the Total Gross, so you must add them to your Total Gross pay. If you have taxable fringe benefits, they will be listed in the Hours and Earnings section of your pay statement.
• Taxable Fringe Benefits include, but are not limited to:
  • Regents Tuition Benefit Program
  • Car leasing benefit
  • Gift cards
  • Moving expenses

3. Add Taxable Employer-Paid Benefits

• Taxable employer-paid benefits are noted with an asterisk (*) in the Employer-Paid Benefits section of your pay statement. They are subject to federal, state, Social Security, and Medicare tax withholding.
• The value of employer-provided group-term life insurance over $50,000 is considered a taxable benefit that is added to your taxable wages and reported on your Form W-2.

4. Subtract Before-Tax Deductions Total

• Before-tax deductions will reduce your federal and state taxable gross wages, and some will also reduce your Social Security and Medicare wages.
• Before-tax deductions include, but are not limited to:
  • Faculty Retirement Plan
  • Minnesota State Retirement System
  • Optional retirement plan
  • Medical and dental
  • Parking

5. Equals Federal Taxable Gross