04:05 AMERICAS
The Form W-4, Employee’s
One of the most common mistakes in the payroll tax area involves depositing state taxes
Withholding Certificate While the federal Form W-4 is fairly straightforward, it is important to watch for updates. This form can reflect changing federal laws, and a big change occurred in 2020 that still confounds many employees and employers. Employers can honor any employee’s request to change their elections by the next payroll processing cycle, but no later than 30 days after they have received it. I’ve seen many times that employees will try to change the meaning of the form by requesting a flat amount or flat percentage for federal withholding. Neither of these are allowable requests. At the state level, for those states that have their own version of a W-4, several states have rules that if the employee claims “X” amount of allowances or higher, the employer is required to submit a copy of that W-4 to the state. This often is overlooked by employers. For employment tax compliance in the U.S., employers still can fall short because the devil remains in the details.
Tax Deposits One of the most common mistakes in the payroll tax area involves depositing state taxes. As companies grow and their state income tax withholding increases, the state tax deposit frequencies and rules can change with that growth. Many do not conform to the federal tax deposit schedule. If the employer is not paying attention, their deposit requirement could change from monthly to weekly or semi-weekly, depending on the state. Unemployment The most common error is not keeping up with the annual rate changes on a timely basis. This can impact budgeting, too. Also, it is very important to load the latest rates in the payroll system. Payroll needs to check because often the third-party may not have the latest rates in their system. This can result in filings that are wrong, and, if short, the employer will owe more tax and likely penalties.
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GLOBAL PAYROLL MAGAZINE ISSUE 12
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