News & InfoEP StoreAcademySupportCommunityProducts by Country
Blog Home

5 Top Payroll Tax Errors and How to Prevent Them

Production payroll can be a daunting task, but it doesn’t have to be! Payroll Tax expert Becky Harshberger shares tips to help ease the process
September 28, 2021

Becky Harshberger

5 top payroll tax errors-calculator-accounting ledger

Are you kicking off a pilot for a new comedy series in Los Angeles? Or maybe, about to embark on a multi-million dollar blockbuster in Toronto? Whatever the size of your production, it helps to be aware of common payroll errors and how to avoid them. Luckily, with the help of our digital onboarding tool, SmartStartit will be a breeze getting your employees paid on time with paperwork that is error-free from the start.

Let’s review 5 of the most common areas for payroll tax errors and how you can avoid them!

1. California Loan Out Withholding

If your production is performing services in California, you must register with the California Secretary of State. On EP loan out start paperwork (or in SmartStart), the loan out must note if they are registered with the Secretary of State of California, North Carolina, and South Carolina (SC and NC have the same registration requirement as CA). The Entertainment Partners Paymaster will verify that the Loan Out is registered and in ‘Good Standing,’ meaning you’re required to be up-to-date on all fees, and have filed a corporate tax return from the most recent year. You can verify on this website here

If you miss checking this box on the Entertainment Partners Paymaster, the system will automatically withhold 7%, which quickly gets the attention of the loan out owner. Eventually, the production will ask for a refund, or the loan out will quickly correct any deficiencies and ask for a refund a few weeks later.   

Solution: If the loan out does not check the ‘registered to do business in CA’ box, ask if they intended to leave it blank, and tell them they will be subject to a 7% withholding.

Check the EP edits (examples: SmartTime Edit, EP Employer Fringe Edit, EP Employee Fringe Edit). If you see a CA loan out withholding, verify that the loan out left the box unchecked. If they checked the box and the 7% withholding tax shows on the edit, call or email your paymaster with either of these questions:

  • Was the item an oversight?
  • Are they not registered with CA SOS?  Sometimes it happens that they did register recently, but the website hasn’t been updated yet.

2. Loan Out Incentive Withholding

If your production is in one of the states on this chart, be sure the correct film incentive withholding is taken on each payment!

Missed withholding can impact the film credit and may be difficult to collect after the production goes to post-production.

Solution: Check your starts and your edits, especially if a loan out starts in the middle of production.

3. Escrow Payments

When Entertainment Partners is asked to record escrows, chasing the required taxation becomes an issue. That’s why this is one of the most challenging and time-consuming errors to fix, and it frequently happens in one of two ways: 

  • When pre-production escrows do not consider the film incentive taxation requirements. 
  • They are paid to an individual, but employment related taxes haven’t been held back.   

Solution: Prior to sending an escrow or advance payment, contact the Entertainment Partners Tax Support team. Our finance experts will calculate the taxes to hold back for the production, and save you a big headache in the long run!

4. Incorrect Resident or Work State

Oftentimes, the work state, the place where an employee is working on a job may get mistakenly listed as the resident state, meaning the place where an employee claims as their permanent home for tax purposes. If this happens, crew members or talent may end up with a surprise W2 for a state they have never lived in and it can cause complications when they file! The error can be compounded if the resident or work state requires a local or disability tax, or an additional employer tax. If the withholding on an employee’s wages is also part of the state film credit (like loan out withholding) this can add additional complications.

Solution: In the first few weeks of a production, set aside a “check your paycheck” day! Verify resident and mailing addresses, email addresses and work locations with all crew members and talent on payroll. 

5. Tax Days and Work Days

If the wrong number of ‘tax’ days are listed on a timecard, it affects the amount of taxes on the paycheck. For example, there is a significant difference in taxes when you list 7 tax days versus 5 tax days. Payroll systems are programmed to calculate a paycheck based on annual tables, so if you work one day, the system thinks you earn that same amount every work day of the year. This can cause taxes to be over calculated. The W4 an employee fills out makes the same assumption. Any intervention of either the tax days or changing the W4 could result in either an over withholding, or under withholding of the employee’s true tax liability. To further complicate matters, adding the wrong number of workdays can impact union benefits as well.

Solution: Check those edits! It’s a keying error. Thanks to the new edit report feature on New SmartTime you can check for those errors early. If you are not using New SmartTime, ask for both the employee fringe edit AND the employer fringe edit. You’ll need to see both to catch these common errors.

For additional insider tips like this to help with your accounting, and even more customized expert advice on payroll, we’re here to help make your production’s financial journey smooth sailing ahead!

Related Content

EP Blog_SQUARE-Tips for tax day

Tips for Tax Day 2022

Your ultimate tax filing checklist - the deadline this year is Monday, April 18th!
EP BLOG_Payroll_Cleanup_Becky_Harshberger_sq

Everything You Need to Know About End-of-Year Production Payroll Cleanup

Reconciling payroll errors and generating accurate W-2s can be a tedious process. These proactive steps...

Why Accurate Payroll Tax Withholding Matters to Film Budgets

Wendy Black, EP’s Vice President of Incentive Operations, shares tips for ensuring your production...
Best Practices for Year-End Payroll Cleanup-Panelists-sq

Best Practices for Year-End Payroll Cleanup

Payroll tax expert Becky Harshberger shares best practices to help production accounting teams prepare for...
Master Series Thumbnail-Best practices for accurate payroll tax withholding

Best Practices for Accurate Incentive Payroll Tax Withholding

Learn how payroll tax withholding impacts a production incentive or film tax credit, and how productions...
Master Series Women in Animation-thumbnail

Women in Animation: A 3D View

Marge Dean, Mandy Tankenson, and other women leaders from across animation come together to celebrate...
Bradley Cooper-nightmare alley

Meet the Assistant Director

A conversation with Myron Hoffert ('Nightmare Alley')
International Film Financing panel-featured

Film Financing Explained: International Financing

International production experts discuss how producers can utilize financing systems outside of the US,...
EP Blog_SQUARE-Sound Mixer-Lora Hirschberg

Meet the Sound Mixer

A conversation with Oscar-winning re-recording mixer, Lora Hirschberg ('Inception', Skywalker Sound)
Digging Out of a Deficit-featured

Digging Out of a Deficit: What to Expect in the Second Quarter of 2022

Federal and State Unemployment Insurance rates are rising. Learn how these changes will affect 2022 and...
International Financing-John Hadity-ft

The Beginner’s Guide to International Film Financing

What to know before you begin an international financing plan

Meet the Executive Producer

A conversation with Mike Drake ('Just Mercy') on the path to becoming and EP, and the role of social...
EP BLOG_Decoding-Your-Paystub-S

Decoding Your Paystub in 2022

What deductions may look different in the new year

Meet the Set Decorator

A Conversation with Claire Kaufman ('Little Women')

Creating a Winter Wonderland

How ‘Elf’ Production Designer, Rusty Smith, Produces the Perfect Snowy Scenes for Film and Television
2022 Budgeting-sq

Budgeting for 2022: A Production Accountant's Guide

EP's Payroll Tax, Production Incentives, and Business Development experts explain how inflation,...
Master Series: Budgeting for 2022-1

Budgeting for 2022: What Productions Need to Know

From unemployment taxes and worker's compensation to the price of labor and materials, production costs...

Meet the Editor

‘Chucky’ editors Randy Bricker and Shiran Amir on navigating the entertainment industry and how they...
john hadity-beginners guide to hybrid film financing

The Beginner's Guide to Hybrid Film Financing

How to successfully navigate working with foundations and investors to finance your next social-impact...
John Hadity-Sandra Schulberg-Hybrid Financing Master Series

Film Financing Explained: Hybrid Financing

Sandra Schulberg joins John Hadity for a spirited discussion on Hybrid Financing and how filmmakers can...
Identity Security Film Production-sq

Identity Security in Production

5 Strategies to Manage Risk and Resist Cyberattacks in the Entertainment Industry

Film Financing Explained: Soft Money Financing

Vivian Hua joins our panel of financing and incentive experts to discuss funding film and television...
Canadian flag

5 Things to Know Before Working in Canada

Prepare for your next job in Canada with this checklist of payroll considerations
Topic: Canada
 John Hadity-Guide to Soft Money Financing-sq

The Beginner’s Guide to Soft Money Financing

How filmmakers can capitalize on incentives, film funds, and more to finance their next project
 Adjusting the W4-Becky Harshberger-Sq

How to Adjust Your Tax Withholdings Using the New W-4

Making small adjustments throughout the year can save production workers big at tax time!
EP Blog_Jesse Wente

Supporting Indigenous Storytellers of Canada

How the Indigenous Screen Office (ISO) offers advocacy and funding for First Nations, Inuit, and Métis...
Topic: Canada
Sian Richards and Queen Latifah-square

A Face Kit for Every Skin Tone

Hollywood makeup artist Siân Richards is transforming the makeup industry for actors of every shade.
EP Blog_SQUARE-Pitching Reality Tv-2

Pitching and Financing Unscripted Television

Ready to sell your big idea for a reality TV program? This guide will help prepare you for the road ahead.
Jennifer Liscio

Spotlight: Jennifer Liscio, VP of Legal Affairs and Tax Incentives

Meet EP's Canadian legal affairs and tax incentives domain expert, Jennifer Liscio, and learn how she’s...
EP Blog_SQUARE-Historical content and new media

Residuals and the Streaming Model

How residuals apply to historical content on new media platforms.
Bloomberg tax logo-Newsroom-Thumbnail

Remote Workforces Create New Employment Challenges for Employers

Employers should be aware of any local tax obligations for employees working remotely.
EP Blog-World Revenues-2

The Beginner's Guide to World Revenues, Foreign Sales, and Senior Debt

Learn how shopping your project around the world to secure funding commitments for distribution rights can...
EP Blog_SQUARE_Fighting Hollywood Stereotypes-TTEI

Fighting Stereotypes and Rethinking Representation

How TTIE is advancing authentic storytelling in Hollywood by empowering historically excluded writers and...
Oklahoma route 66 sign

A New Frontier in Filmmaking

Oklahoma is becoming a production destination, thanks to new incentives and infrastructure programs.

Contracting in a COVID-19 World  

The pandemic has affected how UK production companies contract crew. Here’s how to reduce the impact of...

Terms to Include in UK Crew Contracts

Common terms which studios and production companies include in their UK crew contracts.
Topic: UK

The UK GDPR and how Productions can Reduce their Exposure - Q&A with Sheridans

Sheridans’ Associate Krishan Neelendra answers key UK GDPR questions from production companies and...
Topic: UK
KJ Lamb and Simon Donovan

Empowering the Next Wave of Production Accountants

The EP Production Portal team was delighted to participate in the biannual Netflix Assistant Production...
cell phone with sticky note stating sign here

Six e-Consent Myths (and Why They’re Not True)

Sheridans Associate, Sarmad Saleh, debunks some common e-consent myths.
Topic: Legal
Master Series Panelists-World Revenues, Foreign Sales, Senior Debt

Film Financing Explained: World Revenues, Foreign Sales, and Senior Debt

Learn how working with agents, international distributors, and gap financiers can all factor into...

Producing with Purpose

Creative Producer, Kimberly Goodman ('Selling Sunset', 'Project Runway') shares insights on creating...
recycling conversation

Sustainability in Production: Q&A with Nikki Saunders

Nikki Saunders on sustainable filming practices, COVID-19, and why carbon offsetting isn’t a...
EP Blog_The Race to Net Zero is On for Big Studios

The Race to Net Zero is On for Big Studios

Film and television studios are embracing the green movement in a big way. Here’s what you can expect to...
EP Blog_SQUARE_meet the cinematographer-dan-laustsen

Meet the Cinematographer

A conversation with Dan Laustsen ('John Wick', 'Nightmare Alley').

Georgia Proposes Capping and Prohibiting Sale of Film Tax Credits

The changes, if signed into law, would cap the amount Georgia hands out in film and TV tax credits at $900...
EP Newsroom-Thumbnail-Portland Business Journal

How Oregon’s updated film incentive law could boost the local economy

A new Oregon film and media incentive law could draw more movie productions to the state.
EP Blog_Marge Dean

Opening Career Doors

How WIA President, Marge Dean, is shaping the future of animation and empowering underrepresented genders
Anthony De La Rosa-EVP-Residuals

Spotlight: Anthony De La Rosa, Executive Vice President, Residuals

Meet EP’s resident residual domain expert, Anthony De La Rosa, and learn what inspired him to enhance and...
Los Angeles Times logo-sq

Why the Cherokee Nation is Offering Rebates to Film in Oklahoma

Joseph Chianese speaks to the LA Times on new incentive
EP Blog_SQUARE_Island Incentives

A Ticket to Paradise

Island Incentives Bring Productions Ashore

PayTalk: The Recipe for a Successful Payroll 2022 (Part One)

Davida Lara joins the PayTalk podcast to share strategies for leading successful teams

35 Production Accounting Terms You Should Know

Ready to test your production accounting vocabulary knowledge? See how many of these 35 common terms you...
Future-of-production-virtual stages

The Future of Film and Television Production

Virtual stages, remote production offices, and other advances in technology drive the evolution of...

Kickstart Your Production Career with the EP Academy

From Production Accounting basics to technology certifications, EP’s online courses offer one-of-a-kind...

The Psychology of Terror

How our deepest personal fears inspire cinematic monster makers Todd Masters and Steve Wang

Mission: NOT Impossible

Production incentives give producers options, increase infrastructure development and jobs promoting...
Christine Davila, Jairo Alvarado, Sonia Gambaro

Authentic Latinx Storytelling Starts with Inclusion

Christine Dávila, Jairo Alvarado, and Sonia Gambaro work to amplify the talents of underrepresented...

Streamers and the Changing Landscape of Film Distribution

Director/Producer Daniel Farrands on strategies for success in the time of VOD

Meet the Paymasters

The hard-working payroll professionals behind Hollywood's paychecks

How to solve a compounding problem?

The perennial shortage of production accountants has been made worse by the competition for resources, but...

New Terms Under Return-To-Work Agreement

RTW extension includes new two-part delineation, and the role of the vaccine
Topic: Legal

Payroll & Finances

PayrollResidualsSmartStartNew SmartTimeProduction PortalEP On LocationSmartAccountingEP LiveSmartPOCASHétPayPaymaster Rate GuideEP Residency

Manage Multiple Productions

AssetHubSmartHubSmartHub Vault
Subscribe now

Be an industry insider with EP's
newsletters and alerts

LegalPrivacy NoticeSecurity
© 2022 Entertainment Partners. All rights reserved.