You know those little payroll details that seem harmless in the moment? The address that didn’t get updated. The W-4 that hasn’t been looked at in years. The bank account change mentioned after payroll has already been processed.
They may not seem like a big deal at the time, until tax season arrives, a paycheck gets delayed, or an employee gets an unexpected surprise.
A few of the most common payroll issues we see are also some of the easiest to prevent with timely communication and a quick review of employee information.
Federal withholding that does not match the employee’s situation
If an employee finds that too little federal tax has been withheld from their paycheck, the issue often traces back to their Form W-4. Life changes such as a new job, marriage, divorce, a second household income, dependents, or other income changes can all affect withholding.
Employers should not advise employees on how to complete their W-4, but they can point them to the IRS Tax Withholding Estimator. The IRS recommends checking withholding each January and after major life changes to help avoid an unexpected tax bill or penalty.
Incorrect employee address information
An outdated or incorrect address can create W-2 problems and, in Pennsylvania, may also lead to incorrect local withholding. Pennsylvania’s Department of Community & Economic Development notes that employees are required to complete a Residency Certification Form when hired and with any subsequent address change.
When an employee moves, they should complete a new Local Earned Income Tax Residency Certification Form so the employer has the correct PSD code and Earned Income Tax rate on file.
Employees find their local withholding rate and PSD code through Pennsylvania’s official Municipal Statistics address search tool.
Direct deposit changes were made too late
Another common payroll issue happens when an employee changes bank accounts and does not update their direct deposit information. If payroll is already being processed, a last-minute update may not be enough time to prevent a rejected deposit or payment delay. We can arrange to have a paper check issued during the account changeover so employees don’t miss a paycheck.
A good rule of thumb: employees should notify their employer of direct deposit changes before the end of the pay period, not on payday.
A little prevention goes a long way
Payroll accuracy depends on timely, accurate information. Encouraging employees to review their withholding, update address changes promptly, and communicate banking changes early can help reduce avoidable problems later.
For employers, clear reminders throughout the year can make a real difference. For employees, a few minutes of review now can prevent a much bigger headache at tax time.
Questions? We can help
Our experienced Payroll team is here to help you keep your payroll processes running smoothly. The links mentioned above, along with additional helpful information, can be found on our website as well.