… that only a child could do it! So crooned Tom Lehrer about New Math.
Tom never worked in Payroll.
Most folks look at their paychecks, and figure it’s pretty simple and straightforward. X hours time Y dollars equal Z pay. Do a couple of quick lookups for taxes and some other goofy deductions, and that’s about it. At the end of the year, sum everything up for Uncle Sam and the W2s. Easy-peasy.
As someone who has now already sat in on more payroll and timekeeping and W2 meetings than I care to have, I can tell you it’s more hard-chard than easy-peasy. Way more. Think 1040s are hard? Hah!
Sitting in a meeting today, I started tallying up all the complications as we’re looking at changes to our W2 printing this year. First off, the Feds change things subtly each year, as do, within the company, the Payroll and Accounting groups, not to mention Legal. The biggest complication is that we work interstate (we’ll ignore all the complications of our international operations), so we end up producing payroll and tax reporting to each state we work in, and each state we have residents in. And if folks move from one state to another, that means multiple W2s for that, with different rates and …
… oh, wait, some states don’t have income tax. There’s an exception. Did we calculate and deduct that right? Well, it’s made up for by adding in the localities, even within a state, that charge some sort of tax, or, like Denver, a head count ($25/month or a paycheck or a year or something for everyone who works inside of Denver city limits, like I used to). Multiple W2s there, too.
But while we’re on state, we have disability insurance and unemployment insurance and how those vary from state to state and employer and employee contributions. Not to mention by job category — staff, or craft, or union …
… ah, union, where we have multiple lookups for any given individual based on their job classification, their particular contract, their shift, plus the various deductions and dues (some of this applies to others, of course), which may be based on a per hour, or per day, or per paycheck or per year amount, sometimes with a maximum cap, sometimes with a minimum threshold, sometimes as a percentage of gross or straight time, or sometimes as a flat amount. All of which may be overridden for one reason or another, and which may, or may not, influence taxable wages, etc.
And then there are deductions and other expenses and earnings that may be pre- or post-tax (of different sorts, since Federal tax and Medicare-considered tax, and FICA are all handled at different rates and rules …). Plus pensions and 401(k) stuff, and bonuses and stock options and other reportable income/earning things. Plus benefits (and benefit payments and employer/employee splits, and certain projects/sites we do work at where the contractee picks up some of that or adds to it).
Oh, back on the states, we also do work in Puerto Rico, which as somewhat different rules and a different W2 form (bilingual, among other things). And if a given employee works both in PR and stateside, things get even more fun.
One hell of amount of work goes into calculating that paycheck and deciding on what W2s you get. And it’s all a moving target, as the rules and regs and locations and carriers and stuff constantly change and adjust their numbers, percents, caps, etc.
It’s a wonder any of us ever get paid. Or get our W2s. Or don’t go slowly and silently MAD, MAD I TELL YOU!