Moving is stressful. Between boxes, utility transfers, school registrations, and updating accounts, telling payroll about a new address may not be at the top of an employee’s list.
For employers, however, an employee address change is more important than it might seem. An outdated address can create problems with payroll records, tax documents, employee communication, and even the delivery of important information after someone leaves the company.
That is why employers should have a simple process for keeping employee contact information current.
Why an Employee Address Change Matters to Payroll
An Address Is More Than Contact Information
Most employers think of an address as a place to mail something. In payroll, it can be much more than that.
Employee records contain information used throughout the employment relationship. When an employee moves and no one updates payroll, the old information may eventually appear on tax documents or other important records.
An employee address change can become especially important when employees move to another city or state. Depending on where an employee lives and works, different state or local payroll requirements may apply.
Employers should not assume that an address update is simply an administrative change. A move may be a reason to review whether anything else within the employee’s payroll profile needs attention.
The W2 Problem May Not Appear Until Months Later
Old Addresses Create Year End Headaches
One of the easiest times to discover an outdated address is also one of the worst times: when a W2 comes back undeliverable.
Employers are responsible for furnishing employees with Form W2 showing wages and taxes withheld. The IRS also requires employers to retain employment tax records for at least four years, including employee copies of W2 forms that are returned as undeliverable.
That means an employee address change forgotten in August could become a frustrating payroll issue months later.
The Society for Human Resource Management also recommends that employers make reasonable efforts to maintain current employee contact information. When former employees cannot be reached, employers may still need to provide final paychecks, W2 statements, or other required information. SHRM explains what employers can do when former employees cannot be reached.
Accurate information now can prevent unnecessary detective work later.
Should a Move Trigger a New Form W4?
Review Withholding Without Making Assumptions
An address change does not automatically mean an employee needs a new Form W4. However, moving is a good opportunity to remind employees to review their payroll and tax information.
The IRS explains that employees who want to change their federal income tax withholding generally do so by completing a new Form W4 and submitting it to their employer.
Major life changes sometimes happen around the same time as a move. Marriage, divorce, a second job, or a change in household income can affect an employee’s withholding preferences.
Employers can provide resources without giving employees personal tax advice. Payroll Complete has a helpful guide explaining how employers can help employees complete Form W4 properly.
Remote Employees Add Another Question
Where Does the Employee Actually Work?
Remote work has made employee location more important.
An employee may tell you they moved, but employers should also determine whether the person’s work location changed. Someone who moves across town presents a different payroll situation from someone who moves across a state line and continues working remotely.
When an employee address change involves a new state or work location, employers should review the applicable payroll requirements rather than simply replacing the mailing address in the system.
This is particularly important for growing businesses with employees working from multiple locations.
Make Address Updates Part of Your Payroll Routine
Create a Simple Process Before Problems Appear
Employers do not need a complicated system for keeping employee information current. They do need a consistent one.
Consider asking employees to review their contact information periodically and creating a standard procedure for reporting changes. Employers should verify items such as:
- Home address
- Mailing address
- Personal email address
- Phone number
- Emergency contact information
- Work location when applicable
It is also smart to confirm contact information during an employee’s exit process. SHRM recommends obtaining updated addresses and other contact methods before employees leave whenever possible.
Small Updates Can Prevent Big Payroll Problems
Keep Payroll Records Current
An employee address change may seem like a small administrative detail, but small details matter in payroll.
Current employee information helps businesses prepare accurate records, deliver important documents, communicate with current and former employees, and identify situations that may require additional payroll review.
At Payroll Complete, we believe payroll should be accurate before a small oversight becomes a bigger problem. Keeping employee information current is one simple habit that can make year end reporting and everyday payroll management much easier.