For many employees, the holiday season is a time to slow down and smell the pine trees. But, for the payroll department, this time of year is extremely hectic. Not only is payroll busy with year-end responsibilities for all employees, but it is also the time of year when all relocation expenses and related payroll taxes must be finalized for reporting on an employee's W2 form. Even if a company’s transferee population is relatively small in comparison to the entire employee base, juggling the myriad requirements, details, and deadlines associated with year-end payroll management and reporting is stressful.
By following some of these tips during the year, human resources and relocation managers can help ease some of the year-end stress associated with relocation expense reporting.
Implement regular, frequent reporting. By sending relocation expense information periodically throughout the year, instead of all at once in December, payroll will be able to tackle the wave in pieces. This way, by the time the holidays roll around, there will only be a small handful of expenses and tax reports that need to be entered.
Reconcile data throughout the year. It’s a good idea to encourage frequent reconciliations between your company’s payroll records and your relocation companies reports. Not only will this help your business stay on budget and help identify any problems sooner, but it will also help payroll avoid a mountain of work at year-end. By reconciling quarterly, for example, all expense submissions and tax calculations up through the end of September would already be deemed accurate, making year-end reconciliation a three-month project instead of a full-year headache.
Give your payroll department a voice. It’s important to involve the payroll department in setting up the year-end schedule with your company’s relocation management company. Payroll really knows best when they need to receive information. They understand how long it will take to review it and if they need to return anything back to the relocation company. By working within your payroll folks' schedule, you will avoid overwhelming them at an inopportune time. Don’t forget to build in time for adjustments and recalculations.
Internal records should be up-to-date. Make sure that every transferee’s HR and payroll records are up to date in regards to when they started work in the new location. This information will impact state tax filings. Sometimes, depending on where a transferee is in the relocation process, payroll records have a different work location on file. In order for everyone's records to be in agreement, the work locations need to match. By ensuring that the company’s Human Resources Information System, the relocation management company's records and the payroll system are all in agreement, the company will avoid having to make adjustments at year end.
Follow-up with your transferees on dependents. At the beginning of the relocation, discuss with transferees the need for accurate information regarding the number of dependents claimed for tax purposes, and their filing status. The information that the transferee provides to the relocation management company should match their payroll records and their annual income tax filings.
Think recruitment and retention. Keep in mind that many of the employees being transferred are highly sought after talent and/or senior level executives. By bringing together your payroll department and your relocation management company frequently, and by ensuring accurate reporting and record-keeping, you are boosting the accuracy of your transferees’ individual payroll records and W2s. Surely, a streamlined and efficient tax reporting system is not only a huge benefit for employees, but it will also present HR, payroll and the company in the best possible light to decision makers and new candidates.
Check-in after the storm. Early in the New Year, reach out to your payroll department to discuss any process improvements or adjustments that need to be implemented for the following year. Do this early on while the experiences are still fresh. Then, put together a plan of action and implement it well in advance for the next year.
Year-end reporting does not have to be miserable. If human resources fosters a strong working relationship between themselves, payroll and the relocation management company throughout the year, then everyone will have more freedom to celebrate and enjoy the holidays.