The infamous W-4 might seem like a simple little piece of paper on the surface, but it’s how employers calculate tax withholdings. And unfortunately, it has the less-than-magical power to multiply exponentially when you execute live events, produce multimedia content, or just simply employ a whole lotta people.
Here’s why W-4s are so dang hard to keep track of:
1. They’re subject to change without warning
This is one of those documents that employees can change as often as they want. Maybe they got married or moved to a new address. Or, maybe they change their mind about the number of allowances they want to claim every month. Whatever the reason for the change, employers must implement changes within 30 days of receiving new paperwork. That’s a lot of uncertainty combined with a lot of time updating records.
2. The battle continues: State versus federal
Some states use their own unique W-4s, some just default to the federal W-4, and some even call them by another name entirely. Some states (Here’s lookin’ at you, Nevada!) don’t even tax while others have a slightly more complicated approach than usual. For example, in California, if an employee has more than 10 exemptions, their W-4 needs to be sent to the federal government for verification. Any other place, if an employee needs more than 10 exemptions, they’ll need a lock-in letter from the IRS. To top it all off—any of this could change at any time.
3. Employee mistakes cost YOU time
When the state or federal government does an audit on individual taxes and discovers someone has been withholding incorrectly (usually it happens when an employee claims exempt), the government sends a letter to the employer requesting the corrected paperwork. Did we mention that the tax filing process could cause uncertainty and eat up your time…?
The bottom line:
Even if you hired an employee for a single event or just one-day last year, you still have to have the correct W-4 for them. Whether you don’t know how to keep track of the W-4 du jour, aren’t sure how to get your hands on the right documents, or you just simply don’t have the time; PayReel can save you the headache by taking tax management off your plate. We can make all that hands-on paper-collecting and tax management a distant memory—including keeping you compliant. In the wise words of Forrest Gump, “Well that’s good. One less thing.”
One more thing: There are certain career paths (like tax lawyering) that really require a special type of person. Unless you’re one of those, (which we’re not) you’re not legally allowed to give your employee’s tax advice. Send them to the IRS.
Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want when they want and that everyone is paid properly. Leave all payroll services and details (even taxes) up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at303-526-4900 or by emailing us here.
Relax. We got it.