Blog Home

Why Accurate Payroll Tax Withholding Matters to Film Budgets

Wendy Black, EP’s Vice President of Incentive Operations, shares tips for ensuring your production receives eligible incentives and credits
November 16, 2021
film budget meeting

Preparing for production is one of the busiest times of a project! There are so many moving parts to track, from location scouting to hiring crew. And although mistakes can happen, it’s important to safeguard your financials along the way. Accurate payroll tax withholding is one area production can’t afford to overlook because it can jeopardize whether you receive a tax incentive or film tax credit and significantly impact your overall budget.

Incentives Expert and Entertainment Partners' VP of Incentive Operations, Wendy Black, shares this guide to help clients effectively plan for a successful audit and never miss out on receiving those important incentive dollars.

Start With the Right Questions

As your production is getting off the ground, remember to ask these three questions:

1. How will payroll impact my production incentives?

Many productions choose to film in a certain jurisdiction based on the production or tax incentives offered by that location. In many cases, in order to qualify for those incentives, a production needs to withhold taxes on specific individuals or loan-outs and remit that income tax  to the state. If there is a failure to report and remit  the income tax withholding, then a production can lose the tax incentive related to that crew member or cast’s labor costs.

2. Who requires tax withholding?

Every jurisdiction has different legislation that impacts how much tax and who needs taxes withheld from their paycheck and remitted. Tax withholding often impacts a loan-out: individuals who set up a corporation in order to capture certain tax benefits. Because loan-outs are not working as individuals, their tax withholding is not automatic and withholding has to be triggered through a manual process. This can potentially leave room for large errors if not communicated or not communicated correctly to the paymaster.

3. What is the timeline to remit taxes?

Many jurisdictions are getting stricter about allowing late payments or adjustments, and this will cause a production to lose out on a tax incentive if not paid on time. Typically, the time to remit taxes is monthly or quarterly, but if you’re working with EP, our goal is to have all withholding processed in the at the time the employee is originally paid.

Avoid the Most Common Withholding Errors

Each jurisdiction has different incentive programs which are dictated by legislation. Productions often run into issues at the time their incentives are audited due to mistakes related to missed or inaccurate withholding. This can happen for a variety of reasons. Productions are busy, and sometimes communication breaks down between the production and payroll, especially when it comes to accurately identifying the location and knowing when to withhold.

Remember these best practices to help ensure your show is capturing withholding correctly:  

  • Review any specific requirements when filming in a state with a production incentive. Make sure you understand what they require and who it applies to (BTL, ATL, residents, non-residents, loan-outs, etc).
  • Advise your paymaster if you are filming in a production incentive state.
  • Send the paymaster a list of all loan-outs and individuals requiring special withholding.
  • Notify your paymaster if any loan-out companies or individuals do not require special incentive withholding.
  • Alert your paymaster to any changes or additions affecting the production talent or crew.
  • Ensure the proper work location is listed daily on the timecards, especially if you are working in multiple locations.
  • Batch anyone requiring special withholding separate from regular payroll.
  • Review all edits before releasing any payroll.

There is no 100% fool-proof way to ensure you’re capturing all qualified spend. Mistakes can happen. But strong communication between the production and paymaster can be key to reducing errors and ensuring accurate payroll tax withholding. For additional help on how to approach payroll when payroll withholding is required as it relates to incentives, download our withholdings best practices checklist.

Key Takeaways

  • Understand the incentive rules of the jurisdiction a production is working in and if there are any special withholding requirements.
  • Communicate those requirements to the person processing the payroll.
  • Communicate any errors to your paymaster immediately so they can make adjustments.
  • Follow up to ensure that the withholding actually happens before the payroll gets submitted, not later when a crew member or talent has completed their work on the project.

For more information on how to properly plan for withholding of your crew and loan-outs in incentive jurisdictions, watch our Master Series webinar: Best Practices for Accurate Incentive Payroll Tax Withholding. If you have any questions about specific incentives or withholding requirements in specific incentive states, please contact the Incentives Group at incentives@ep.com or (818) 955-6050. Our Tax Support team is also available at TaxSupport@ep.com or (818) 480-7333 to answer questions or resolve issues around withholding on a specific invoice or project. As your production partner we want to ensure correct withholding and state reporting, so your production is set up for success!

Related Content

Master Series Thumbnail-Best practices for accurate payroll tax withholding

Best Practices for Accurate Incentive Payroll Tax Withholding

10/22/2021
Learn how payroll tax withholding impacts a production incentive or film tax credit, and how productions...
Watch
Best Practices for Year-End Payroll Cleanup-Panelists-sq

Best Practices for Year-End Payroll Cleanup

11/15/2021
Payroll tax expert Becky Harshberger shares best practices to help production accounting teams prepare for...
5 top payroll tax errors-Becky Harshberger

5 Top Payroll Tax Errors and How to Prevent Them

9/28/2021
Production payroll can be a daunting task, but it doesn’t have to be! Payroll Tax expert Becky Harshberger...

Film Financing Explained: Soft Money Financing

9/2/2021
Vivian Hua joins our panel of financing and incentive experts to discuss funding film and television...
 John Hadity-Guide to Soft Money Financing-sq

The Beginner’s Guide to Soft Money Financing

8/25/2021
How filmmakers can capitalize on incentives, film funds, and more to finance their next project
john hadity-beginners guide to hybrid film financing

The Beginner's Guide to Hybrid Film Financing

11/3/2021
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

10/27/2021
Sandra Schulberg joins John Hadity for a spirited discussion on Hybrid Financing and how filmmakers can...
woman-man-filming-production-sq

Mission: NOT Impossible

10/20/2021
Production incentives give producers options, increase infrastructure development and jobs promoting...
Identity Security Film Production-sq

Identity Security in Production

10/13/2021
5 Strategies to Manage Risk and Resist Cyberattacks in the Entertainment Industry
Canadian flag

5 Things to Know Before Working in Canada

8/31/2021
Prepare for your next job in Canada with this checklist of payroll considerations
Topic: Canada
More
 Adjusting the W4-Becky Harshberger-Sq

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

8/17/2021
Making small adjustments throughout the year can save production workers big at tax time!

5 Things to Know Before Relocating for Your Next Job

7/20/2021
What production workers need to consider before moving to a new state
Equity Financing Panel-thumbnail

Film Financing Explained: Equity Financing

7/15/2021
James Schamus and Michael Helfant join our panel to share expert advice on funding film and television...

The Beginner’s Guide to Equity Financing

7/15/2021
Expert advice to help producers secure funding for their next project

Diversifying Hollywood Through Better Hiring and Training

6/22/2021
How new legislation and production incentives are promoting diversity and inclusion
Sarah Westman-liu and Jennifer Liscio

Canadian Incentives and Legislation News

6/10/2021
The latest updates on incentives, CRA guidance on COVID-19 related costs, and more!

Meet the Production Accountant

5/18/2021
From budgeting, to billing, to payroll, the financial powerhouse behind every production

The Beginner's Guide to Federal Payroll Tax Withholding

5/11/2021
Essential information for individual production workers

Meet The Costume Designer

5/4/2021
The artist behind a character's signature style

Payroll Tax Changes and the New Form 1099NEC

2/26/2021
What you need to know before filing for the 2020 tax season

The Beginner's Guide to Production Incentives

2/17/2021
EP helps filmmakers navigate the complex world of film and television incentives

Spotlight: Becky Harshberger, VP & Practice Leader of Payroll Tax

2/16/2021
Meet the entertainment industry’s foremost expert on Payroll Tax
Becky Harshberger and Neddy Alonso

Preparing for 2021 Payroll Tax Changes and the New Form 1099-NEC

12/10/2020
EP's payroll tax experts walk through the 1099-NEC and other important changes
Kickstart-with-ep-academy

Kickstart Your Production Career with the EP Academy

11/23/2021
From Production Accounting basics to technology certifications, EP’s online courses offer one-of-a-kind...
Psychology-of-terror-steve-wang-todd-masters-feature

The Psychology of Terror

10/29/2021
How our deepest personal fears inspire cinematic monster makers Todd Masters and Steve Wang
Christine Davila, Jairo Alvarado, Sonia Gambaro

Authentic Latinx Storytelling Starts with Inclusion

9/22/2021
Christine Dávila, Jairo Alvarado, and Sonia Gambaro work to amplify the talents of underrepresented...

Streamers and the Changing Landscape of Film Distribution

9/14/2021
Director/Producer Daniel Farrands on strategies for success in the time of VOD

Meet the Paymasters

9/9/2021
The hard-working payroll professionals behind Hollywood's paychecks

How to solve a compounding problem?

9/8/2021
The perennial shortage of production accountants has been made worse by the competition for resources, but...

New Terms Under Return-To-Work Agreement

8/30/2021
RTW extension includes new two-part delineation, and the role of the vaccine
Topic: Legal
More

Designing for Horror

8/13/2021
How filmmakers create fear through visual techniques
Paul Beyers prop master on set

Meet the Prop Master

7/28/2021
From script to screen, the creative mind behind the props from film and television
Anthony De La Rosa EP Residuals

The Beginner's Guide to Film and Television Residuals

7/7/2021
Important details every producer should know as they budget for their next project
Celebrating Pride Month Panel

Celebrating Pride Month and LGBTQ+ Film and Television

6/24/2021
Celebrate Pride month with us as our panel of groundbreaking producers and activists discuss the past,...

Entertainment Partners Launches New Production Incentive Tools

6/21/2021
New Online Tools help Filmmakers and Producers to Identify their Best Global Tax Incentives

Meet the Producer

6/15/2021
From concept to the red carpet, the producer is there to keep the production moving forward
actors on set

Safety on Set Amid Changing COVID-19 Guidelines

6/9/2021
What productions should know as they head back to work

Choosing the Right Production Incentives

6/2/2021
5 questions to ask when selecting your next incentive-based filming location

Getting a New Start

6/1/2021
Davida Lara shares tips on transitioning into your next role

The Path to Better Diversity and Inclusion in Hollywood

5/25/2021
How production incentives are helping to promote inclusivity
Spotlight on Georgia Production Panel

Spotlight on Georgia: The Producers' Perspective

4/28/2021
A dynamic group of producers, industry experts, and incentive specialists discuss the state of production...

Innovations in Production Incentives

4/27/2021
How emerging local initiatives are driving productions to new jurisdictions

Spotlight: Joseph Chianese, Film Production Incentives Expert

4/20/2021
Meet the SVP and Practice Leader of Production Incentives at EP

COVID-19 and the Impact on State Unemployment Insurance

4/13/2021
How high unemployment claims have led to increased SUI rates across the US

The Beginner's Guide to Production Financing

4/6/2021
What to know before starting your next film or television project

Winning Payroll Solutions Start with the Right Team

4/1/2021
Davida Lara on why the people who make up a payroll team are critical to delivering results
Producing through COVID women producers panel

Producing Through COVID-19: A Discussion with Six Prominent Women Producers

3/25/2021
Stories of navigating the entertainment industry and producing during a pandemic
Pantea Ahmadi and Joe Scudiero

SB 973's Impact on the Entertainment Industry

3/15/2021
How California’s new pay data reporting legislation, SB 973, applys to the entertainment industry
Topic: Legal
Watch

SB 973, California Pay Data Reporting Law FAQs

3/6/2021
The new pay data reporting law and its impact on the entertainment industry

Why Payroll is 'Sexy'

2/1/2021
EP EVP of Payroll, Davida Lara, explains her passion for the industry
Pantea Ahmadi and Alan Wu

California & New York Employment and Privacy Legislation Changes in 2021

1/27/2021
EP's Legal team breaks down important legislation changes impacting production hubs
Topic: Legal
Watch
Melissa Lintinger NBCU

A Conversation with Melissa Lintinger, SVP of Production Finance, NBCU

1/7/2021
How television crews are getting back to work during COVID-19
Paul Steinke

A Conversation with Paul Steinke, SVP Production Finance at Walt Disney Studios

12/9/2020
Mark Goldstein and Paul Steinke discuss the state of the industry, emerging technology and more!
Christy Guilbault, Annette Martinez-Novo

EP Cares — The Industry's Leading Health Insurance Program

11/24/2020
Learn how to get your production company on the industry’s leading health insurance program for non-union...
Master Series Return to Work Agreement Panel

Understanding the COVID-19 Return-To-Work Labor Agreement

11/12/2020
EP's Legal experts explain the entertainment industry's safety guidelines
Subscribe now

Be an industry insider with EP's
newsletters and alerts

LegalPrivacy NoticeSecurity