Payroll Education Payroll Taxes Payroll Trends

Payroll 2022: What’s Out and In

With inflation in 2021 at its highest in many years, several key payroll-related numbers for 2022 increased and there are a lot of other issues that will be the focus of payroll this year.’s annual exclusive “out and in” for Payroll 2022 provides a glimpse at what no longer should be considered as the new year starts, and what will come into play as 2022 progresses.

There were some figures, set by tax law, that remain the same and they include the flat tax rate on supplemental wage payments (22%; 37% once $1 million in supplemental wage payments is reached). The general tax rates for individuals remain the same in 2022 as they were for 2021 (10%, 12%, 22%, 24%, 32%, 35%, 37%).

The Social Security payroll tax rate for 2022 stays at 6.2%, and that rate is to be applied up to the new wage base of earnings ($147,000, see below).

The Medicare/Hospital Insurance tax rates remain at 1.45% up to $200,000 in wages and 2.35% (for the employee only) on wage amounts  exceeding $200,000 in 2022.

The $6,500-a-year additional catch-up deferral amount for those individuals over 50 with 401(k)-type accounts also was unchanged.

And it always remains possible that legislative changes could impact these and others in 2022. 

But, beyond that, here are the major things in payroll that are going “out” and coming “in” for 2022:



Full Return to Office

Hybrid Work-From-Home Arrangements

250 Forms: Form W-2 Electronic Filing Threshold 

100 Forms: Form W-2 Electronic Filing Threshold 

Form 7200: Advance Employee Retention Credit (ERC)

Form 941, Schedule B: Reporting Additional Taxes Because ERC Ended 

$19,500: Tax-Free Deferral Limit for 401(k)-Type Programs

$20,500: Tax-Free Deferral Limit for 401(k)-Type Programs 

State Exceptions for Income Tax Withholding On In-State Telework/Remote Arrangements 

State/Local Withholding Taxes Based on Where Employee Works Remotely

$142,800: Social Security Wage Base

$147,000: Social Security Wage Base

COVID-Related Employment Tax Credits

Taxes On Previously-Eligible Credit Amounts

Social Security Tax Payment Deferrals

Payments of Deferred 2020 Amounts

56 cents-per-mile: Standard Business Mileage Rate

58.5 cents-per-mile: Standard Business Mileage Rate

COVID-Related Mandated Paid Time Off

State-Mandated Paid Time Off

Suspended Withholding on Student Loans

New Student Loan Withholding Orders

COVID-Related Emergency Unemployment 

FUTA Credit Reduction States 

Weekly or Biweekly Payroll Schedule

On-Demand Pay to Digital Wallets

Manual Reconciliations

Automated Reconciliations

Total Defined Contribution Tax-Free Limit


Total Defined Contribution Tax-Free Limit


As in 2021, more resilience and dedication will be required of payroll professionals as they navigate illnesses, changes in the employment environment, supply-chain challenges and social and political upheaval in 2022. 

With all this, staying focused on the commitment to process accurate and timely pay under continued trying circumstances remains at the top of the to-do lists for payroll professionals in 2022.


On Demand Payroll Payroll Trends

Common Payroll Errors and How They Can Be Addressed

  • It takes a payroll department an average of two days to resolve a payroll irregularity.
  • Payroll errors often start with other operations and processing, and payroll departments have to catch and fix them.
  • The many moving parts of payroll means more areas of exposure to mistakes.
  • Most errors start with mistakes and problems entering time and timekeeping.
  • Recent payroll technology, when applied, has a side-effect of reducing timekeeping errors.    

Making fixes and adjustments to pay, tax amounts or for other deductions or rewards after payday signifies something failed in the payroll process. We know this is the case, even though, many times, what ends up being labeled as a payroll error starts with other operations and not the payroll department. 

But, payroll is left to resolve the issue, after the fact. 

It takes an average of more than two days for payroll to resolve a payroll irregularity or error, according to a 2019 Bloomberg Tax & Accounting report of payroll issues. According to the 2020 Deloitte Payroll Benchmarking Survey, respondents named the payroll error rate as the number one key performance indicator for payroll operations. For example, just the process of issuing a payroll error or communication takes time and resources.

How Most Errors Begin

There are several areas of payroll that, without proper processes and oversight, can end up causing payroll professionals to stop, research, identify, resolve and then correct. 

The many moving parts of the payroll process means the practice often is exposed to mistakes. These include errors in calculations and in wage payments, and incorrect or delayed changes for employees, plus mistakes made in tax payments and withholding amounts.

The major area that always seems to come up centers on the timekeeping process. The Bloomberg Tax & Accounting report showed that only 83.35% of survey respondents reported having clean time collection runs. 

There are several reasons that accurate recording of work hours is more prone to problems than any other aspect of payroll.

First, there is an inherent reliance on the ability of employees to follow the proper procedures for recording their time. 

It’s great to have each person responsible for clocking in and out of each shift, or to have them ensure time off work is properly and timely reported. Employee self-service programs should make this easier as well. Yet so many — and this includes their supervisors, who often must sign off on time recorded — continue not to pay enough attention to do it right.

Second, time collection systems vary in their ability to keep track of real time worked. Often, in professional circles, those who have to report time using a computer interface have hours included by default, and it is up to them to make adjustments for any additional time worked or time off, and also to categorize those exceptions to the standard hours embedded in the system. 

Other self-service interfaces allow workers to input their daily time for each day at the end of the pay cycle, and, for many, this means no time worked is ever recorded until the last day of that cycle. The person has zero hours until they interface with the system and add them. 

Manual time clocks are now connected to systems that, in some cases, won’t allow a worker to clock in or out outside of the hours they are scheduled to work. Special permissions are needed to have those hours recorded. According to the Fair Labor Standards Act, employees are to be paid for all time they work, and employers have been in trouble with the Labor Department for allowing workers to perform duties “off-the-clock.”  

Finally, and again, primarily with manual time clocks, people can forget to clock out after a shift, or after a lunch break, they forget to clock back in. These anomalies occur frequently, making this initial part of the payroll experience for workers the most fraught for mistakes. Supervisors need to intervene, and payroll likely can get a record of time worked that is not accurate to start processing.

Because they occur before payroll can be processed, time-worked discrepancies, if identified, need to be resolved and this can slow the kick-off of what would otherwise be a smooth calculation and remittance process. 

So what can employers do to mitigate the challenges of collecting and accumulating actual time worked for employees? 

Recently, there have been reports of improved timekeeping due to the implementation of employer integrated earned wage access, or on-demand pay programs. This is because under some larger third-party on-demand pay programs, in order for workers to have amounts available to access prior to payday, they must complete the clock-in and -out process. 

If they fail to clock out, or clock back in, as noted above, there will be no amount recorded as earned for that day and nothing will be accessible to them on-demand, until it is resolved. 

Employers using such systems have seen a marked improvement in this area, with the payroll team noting these initial discrepancies have fallen off for those that use the earned wage access program. 

As technology improves, systems like those supporting on-demand pay are becoming more sophisticated, and some are now used for specific payment-related reporting that can catch not only the failure-to-clock-out issue, but others. Stay tuned.     



Bloomberg Tax & Accounting, 2019 Payroll Benchmarks Survey Report 

Deloitte Payroll Benchmarking Survey Sponsored by the American Payroll Association and the Global Payroll Management Institute, 2020, Case Study, Starboard Management Group, 2021

Payroll Trends Uncategorized

Staffing Up: Payroll’s Role in Recruitment and Retention

  • Scenarios for payroll playing out across the country reflect the need to hire new workers.
  • Employers now must pay more attention to employee needs and wants.
  • Payroll’s influence on how well employees are treated cannot be underestimated.
  • Value-added processes, including new technology, can help improve retention.

“I put 10 new hires into the system this morning,” said the HR manager to the payroll director. “They are attending orientation tomorrow.” This is the largest number of new hires at one time the company has ever experienced. 

Payroll Paula paused and looked at the HR manager as she pulled up the system interface with the new data. Then she peppered her HR colleague with questions and issues: 

“When is their actual start date? Tomorrow? You will handle E-Verify for work eligibility, right? I don’t see W-4 information for any of these. I can’t put them into the payroll system until they have submitted their tax withholding certificates, both federal and state. Once I have that, I can verify the name/social security numbers with the Social Security Administration.”

The HR manager replied: “At orientation, we expect to get the forms and selections for benefits submitted by the new employees. Systems says they cannot use employee self-service for this until they actually start work tomorrow.”

Payroll Paula knew she had her work cut out for her, and while she knows 10 new hires are coming tomorrow, she really cannot do anything about it on her end until she gets all the information she needs to get them on the system properly, accumulating earnings.

Employee Leverage Grows

Across the country as the economic shut down comes to an end, employers are scrambling to staff up in a number of areas. Flush with federal stimulus loans and tax credits, coupled with boosts in investment dollars because of major growth expectations, many companies are aggressively pursuing new workers. 

But the employment equation has changed. This is especially seen in some key service sectors of the economy, where workers are coming out of this pause looking for greener pastures, and this pressures employers to rethink base wage rates and apply other incentives, such as hiring and retention bonuses and on-demand pay, also known as earned wage access.

What can payroll do to help?

Beyond Basic Administration

The ability to timely and accurately pay remains the lynchpin to a successful pay experience. Almost a quarter (24%) of respondents to a 2017 Workforce Institute survey said they’ve looked for a new job after experiencing a single paycheck error, while 25% said they would seek different employment if they experienced two payroll mistakes.  

Payroll is known for its ability to effectively apply tools and resources to ensure people are paid timely and accurately, but now is the time to take this skill to the next level.

Payroll Paula can do more than just react and ensure the basics are done right. She can be a champion for positive change.

She has always served the employees and her employer, but she’s seen the transformation coming for several years now. This includes a big employer adjustment that focuses now on the financial wellbeing needs of staff. 

Payroll Paula has read myriad studies that show workers are more likely to choose an employer that has a robust commitment to providing tools for workers that can help them save and stay out of payday loan debt, and that uses new technology to provide convenient apps for saving and accessing on-demand pay. And she knows they stay longer when that additional commitment is made by the employer to provide more financial awareness, such as a daily pay balance that tells employees how much they have accumulated, what they have earned so far.

It is time for her to let her colleagues in HR and higher up the chain know that payroll can be key in helping the company navigate successfully out of the pandemic economy and into a new landscape of bettering the work experience for everyone. 


Payroll Service Payroll Trends

Payroll Professionals Turn to Social Media to Evaluate Service Providers

  • A prime outlet for airing complaints in general, social media is becoming a forum for calling out the shortcomings of payroll service providers.
  • It appears no particular service provider is immune to the brickbats.
  • Payroll pros help each other to navigate selecting service providers.

As challenges for payroll pile up due to major, complex legislative changes, payroll service provider solutions are struggling to keep up and deliver at crucial times, according to user reports on social media.

For all that third-party providers do to ensure their clients’ payroll processes are efficient, accurate and timely, there remains concern. 

The complaints appear to span across the entire third-party payroll provider industry of, from the very reputable and well-known to the mid-size and specialty service providers. 

These issues appear to range from system instability and processing delays that impact payroll delivery, to not being able to create usable reports for the employer from the data. There are instances of confusion due to updating procedures, year-end anomalies, and serious customer service problems, all aired out on Facebook, Twitter, Reddit and other platforms. 

Users of services that were pressed minced no words. One said: “Another 65-minute wait for a representative … I finally got a person and they couldn’t figure out the issue … Two hours wasted — payroll processing was delayed.”

Another complained about lack of sufficient support for a specific reporting issue. “When we try to fix or add something, something else ‘breaks.’ I’ve been with this company for a year now and we are on our third rep!” 

A separate service provider received similar bad comments: “Reporting is terrible and if you need something specific you pay a lot for it.”

The issues keep going: 

At year-end, employees using an earned wage access provider at one major retailer were told the option “is not available to associates from Dec 19 to Dec 31.” What a great time to not have access to the highly-touted benefit. 

On being able to generate reports, several echoed this complaint, “They ignored my report request. I had to get other departmental directors involved. We had to pay extra for these reports.”

“Unfortunately, their answer as usual was ‘system limitations’ … no follow-up, no research, no accountability,” cried another.

Many professionals discussed their own work-arounds due to system limitations.

“I keep a separate excel spreadsheet just to make sure it’s right because even though you can see what will be accrued, it may or may not be in the EE’s (employee’s) total,” said one who posted. “Their customer service is horrible”

“Every single time they have an upgrade over the weekend, Monday’s are shot.”

Payroll pros rely on peer evaluation in selecting a provider

Often when these situations are identified as someone asks about a particular service provider, there are a few in the same thread who endorse, and others who pan.

While one says “We are using products from both systems and it’s been great!” Another says “Not user friendly at all. I would never recommend it to any of my payroll friends.”

On another thread about garnishment processing, a similar refrain has one poster saying, “We used them in the past and won’t do it again,” while another says, “The service benefits outweigh the few problems that we know of.”

And there can be more to the concerns than simply what the service provider has offered and can or cannot deliver effectively. Often large service provider systems are set up at the client by approved consultants or teams that specialize in such implementations. And implementations can go badly. For example, “My implementation specialist wasn’t very good. They really made a mess …”

Some are resigned to having to deal with shortfalls in service and delivery.

One in payroll said “I want to switch … but I am just scared it’ll be the same thing elsewhere.” Then another seems to back that issue up, “I wish we hadn’t switched right now. We are at the third check into our new provider and I am so very sad.”

Others pull back completely.

“This is why I appreciate a full in-house payroll. Everything is under my control.”   PYD

Payroll Trends

Payroll 2021: Out and In

The forces of change continue to dominate payroll, and 2021 will see even more changes for employers in how they handle worker pay.’s exclusive “out and in” for 2021 gives practitioners a glimpse at what is going away as the new year starts, and what will come into play as 2021 progresses.

However, many key payroll-related numbers for 2021 will remain the same as 2020 (although there always is the possibility that legislative changes could impact these as well in 2021). The elective tax-free deferral limit for 401(k)-type programs ($19,500), for example, remains the same as in 2020, as is the over-50 additional catch-up amount ($6,000). 

Other figures that remain the same are: flat tax rate on supplemental wage payments (22%; 37% once $1 million in supplemental wage payments is reached); the general tax rates for individuals remain the same in 2021 as 2020 (10%, 12%, 22%, 24%, 32%, 35%, 37%); the Social Security payroll tax rate stays at 6.2% up to the new wage base (see below); Medicare/Hospital Insurance tax rates remain the same as well at 1.45% for most and 2.35% for individuals with incomes generally higher than $200,000, once that amount has been reached for the year.

But, beyond that, here are the major things in payroll that are going “out” and coming “in” in 2021!

Working at Home Office/Home work blend
New Form W-4New Form 941X
State/Local Withholding Based on Company Sites Where Employees Worked State/Local Withholding Taxes Based on Where Employee Works Remotely
COVID-Related Employment Tax Credits Under March 2020 CARES ActClaiming Past Credits
Social Security Tax Deferrals Under CARES Act and President’s OrderAdditional Social Security Tax Payments
COVID-Related Mandated Paid Time Off Under March 2020 FFCRA LawGenerally Mandated Paid Time Off
Paycheck Protection Program Under March 2020 CARES ActPaycheck Protection Program Audits
Suspended Withholding on Student LoansNew Student Loan Withholding Orders
COVID-Related Emergency Unemployment Higher Unemployment Tax Contributions
Social Security Wage Base = $137,700 Social Security Wage Base = $142,800
Standard Business Mileage Rate = 57.5 cents-per-mile Standard Business Mileage Rate = 56 cents-per-mile
Employees Accessing Pay on PaydayEarned Wage Access/On-Demand Pay
Manual ReconciliationsAutomated Reconciliations

Total Defined Contribution Tax-Free Limit = $57,000

Total Defined Contribution Tax-Free Limit = $58,000

Form 1099-MISCForm 1099-NEC

Where to go from here

As in 2020, the payroll professionals who kept a good deal of the economy going despite illnesses, lockdowns, and social and political upheaval can expect more of the same for much of 2021. 

Although most see a light at the end of the tunnel for 2021, those in payroll will need to stay focused on their commitment to process accurate and timely pay under continued trying circumstances, just like the general public is being urged to stick with personal protection protocols until the infection curve declines.

Payroll Trends

Payroll Trend for 2021: Remote Workers

Taxing remote work in 2021

  • Employers forced to address multistate tax-withholding issues
  • Taxing states have patchwork of requirements
  • Some employers may need to register in new states
  • Country-wide solutions proposed, but resisted

How states with income tax requirements are addressing the confluence of workers who are working remotely in other states, maybe their state of residence, or maybe not, will continue to be an uncertainty into 2021. Many employers have been forced to reckon with the potential that they are liable for tax payments for employees outside of their assigned business location. 

Some states have issued temporary reprieves on requiring employers to set up tax withholding in a new jurisdiction (which will expire), others are holding down their existing requirements for taxing nonresidents and residents that had been working in other states, but are telecommuting in their state. These requirements vary from state-to-state and are extremely difficult to apply, especially when employees may not be informing their employer where they are working from. 

An additional corporate tax issue can arise when a single worker teleworking in one state can trigger a status of business-related nexus in that state for the company, subjecting it to corporate filing and tax requirements as a business entity in that state. 

There have been efforts in Congress to set standards for state approaches to taxing teleworkers and employees who cross state lines to work. These have met with much resistance from states that fear they will lose revenue if their policies are forced to change. Look for more impetus to address this issue in 2021.

Business expense considerations in 2021

  • Can reimbursed business-related costs incurred by teleworkers be taxable?
  • Employers need to apply necessary accounting processes for these expenses
  • Guidance prohibits salary replacement, details how exclusions from income work
  • Some states require employers to reimburse costs of doing business remotely 

Along the lines of telework issues that payroll will need to be aware of, there’s the issue of whether certain reimbursed expenses from employers to workers in their homes are taxable. Accounting for legitimate business expenses, so they can be excluded from tax as additional wages for workers, can be tricky. Generally, flat cash reimbursements and stipends need to be included as wages, while more deliberate payments that can be verified (through bills, for example) and are specific to an expense have a better chance of being excluded. The IRS has an extensive program that explains how some procedures to pay expenses qualify for favorable tax treatment, and some don’t. 

Further, in some of that IRS guidance, there are prohibitions on employers seeking to use some of these expenses to offset full salaries, or characterize the reimbursement payments as part of employee wages, discounting the amounts paid for those purposes from someone’s agreed-upon salary or even hourly wage. In an environment when many who remain employed are experiencing salary cuts, some may find it attractive to use business expense reimbursements to artificially fill some of the gap.

Finally, don’t forget that state laws may have a play here as well with business expense plans. California, for example, requires employers to reimburse employees for costs of their mobile phone plan if the employee is using the phone for business purposes. There may be more states passing such requirements in 2021.