Key takeaways
- Set the final payroll date and the provider cutoff before December.
- Check the annual register against the four quarterly Forms 941.
- Collect the owner health insurance and any final bonus before the W-2s are produced.
- File the W-2s, W-3, fourth-quarter 941 and 940 by the January deadline.
Set the calendar
Pick the final payroll date and the date the payroll provider needs the year-end changes. A bonus, a corrected address or a final paycheck after the cutoff can require a corrected W-2.
Put the January filing dates on the calendar: the W-2 and W-3, the fourth-quarter Form 941 and the annual Form 940. Because January 31, 2027 is a Sunday, the 2026 deadlines move to Monday, February 1, 2027.
Collect the register and the changes
Get the year-to-date payroll register by employee through the last payroll of the year. It should show gross wages, taxes withheld, deductions and net pay.
Ask for the final bonuses, commissions, severance, paid time off payouts and any employee who left during the year. Each payment belongs in the year it was paid, not the year the work was done.
Ask for the owner health insurance, retirement contributions and any fringe benefit that belongs on the W-2.
Check the returns
Compare the annual register with the four quarterly Forms 941. The wages, the federal withholding and the Social Security and Medicare wages should agree; a difference is a correction waiting to happen.
Check the annual Form 940 and the state unemployment return. The taxable wage base and the state rate can change, and a wrong rate changes the amount due.
If the payroll provider filed the returns, get the filing confirmations. A confirmation is the proof the return was accepted, not only prepared.
Prepare the W-2 data
Review each employee's name, address, Social Security number and box amounts before the W-2s are produced. A wrong address or number creates a correction and a penalty notice.
For an S corporation owner who owns 2% or more, include the health insurance premiums in the W-2 wages. The amount should match the invoices and the payroll records.
Ask the provider for a preview or a sample W-2. The preview is the last chance to catch a wrong box before the forms are sent.
File and deliver
File the W-2s and W-3 with the Social Security Administration and send the employee copies by the deadline. Keep the e-file confirmation.
File the fourth-quarter Form 941 and the annual Form 940 by their deadlines, and keep the payment confirmations with the returns.
Send the client a short year-end summary: the payroll totals, the tax deposits, the W-2 count and any correction still open.
Review the process
After the filings, list the corrections, the late changes and the questions that came up. Each one points to a step to fix before next year.
The most common fix is earlier collection: the owner health insurance and the final bonus should be requested in November, not January.
Write the changes into the year-end payroll checklist and the client's calendar.