Year-end payroll
Year-end payroll checklist
Year-end payroll is where the payroll records, the quarterly returns and the owners' W-2s have to agree. This checklist covers what to collect from a business client before the final payroll and the W-2s are filed: the register and totals, the payroll tax returns, the owner and benefit details, and the contractor payments that belong on a 1099. Start before the payroll provider's cutoff, not after.
Who sends itSent by the firm to each business client in December, before the last payroll of the year and before the payroll provider closes its year-end changes.
0 of 25 ticked
01Payroll register and totals
02Payroll tax returns and forms
03Owners and benefits
04Contractors and year-end payments
05Deadlines and records
What firms get wrong
- Waiting until January to collect the December payroll register, after the payroll provider has closed its year-end changes.
- Checking the W-2s against the last payroll instead of the annual register and the four quarterly Forms 941.
- Missing health insurance paid for a 2% or more S corporation owner, which should be on the owner's W-2.
- Paying a final bonus or vacation payout after the W-2s are produced, which requires a corrected W-2.
- Treating a contractor paid through payroll as an employee without reviewing the worker's status before year end.
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Questions about this checklist
When are W-2s and year-end payroll forms due?
Forms W-2 and W-3 for 2026 payments are due to employees and the Social Security Administration by January 31, 2027. Because January 31, 2027 is a Sunday, the deadline moves to Monday, February 1, 2027. Forms 941 for the fourth quarter and Form 940 are also due around that date.
What if the payroll provider files the W-2s and 941s?
The firm still needs the register and the filed forms to check the year-end totals. Ask the client for the provider's year-end package and the filing confirmations, not only the W-2 copies.
How should an owner's health insurance be reported?
For an S corporation, health insurance premiums paid for an owner who owns 2% or more are generally included in the owner's W-2 wages. Ask for the invoices and the payroll provider's treatment before the W-2s are produced.
What about a final paycheck or paid time off?
Final wages, unused vacation and severance are payroll in the year they are paid. Send the pay date and the amounts with the year-end records so they are included in the right year.
How long should payroll records be kept?
Keep payroll records for at least four years after the tax is due or paid, whichever is later, as the IRS requires for employment tax records. The firm's retention policy may require longer.
Sources
Checked November 3, 2026. Tax rules, forms and thresholds change; confirm them with the IRS or your tax software before relying on them.
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