A step-by-step year-end payroll checklist: hours and time records, employee data, benefits and fringe benefits, W-2 and 1099 forms, and planning for next year.
Most payroll mistakes are small and fixable during the year. At year end they become harder to fix: they end up on W-2 forms, tax returns and employees’ personal filings. A checklist turns a stressful January into a routine. Whether you run payroll yourself or use a provider, much of the work is checking that the data you send is right, and much of that data starts with hours, overtime, tips and time off.
To total hours with breaks and overtime, use our time card calculator.
Dates below are federal; states have their own deadlines for wage reports, unemployment returns and state W-2 filing. Check your state agencies and your payroll provider’s calendar.
| Form | What it is | Typical deadline |
|---|---|---|
| W-2 | Wage and tax statement for each employee | January 31 to employees and SSA; next business day if that is a weekend (February 1, 2027 for 2026 forms) |
| W-3 | Transmittal summarizing W-2s (paper filing) | With W-2s, same deadline |
| 941 (Q4) | Quarterly federal tax return | January 31 (next business day if on a weekend); February 10 if all tax for the quarter was deposited on time |
| 940 | Annual federal unemployment (FUTA) return | End of January (next business day if on a weekend); February 10 if all FUTA tax was deposited on time. Check the current Form 940 instructions |
| 1099-NEC | Payments for services to nonemployees at or above the IRS reporting threshold, which recent legislation raised; check the current instructions | Give to recipients and file with the IRS by January 31 |
When a deadline falls on a weekend or legal holiday, it generally moves to the next business day. See Form 941, Form 940 and Form 1099. Check the current IRS instructions for thresholds and any changes, since recent legislation has adjusted some reporting rules.
In a small business, year-end payroll often falls between people: the owner assumes the bookkeeper is handling it, the bookkeeper assumes the payroll provider is, and managers do not realize their open timecards hold everything up. Write down who owns each step. A typical split is that managers close timecards and approve corrections by a set date; HR or the office manager confirms employee details, PTO balances and new hires and leavers; the bookkeeper reconciles totals and fringe benefits; and the payroll provider or accountant prepares and files the forms. A shared checklist with names and dates, reviewed once a week in December, keeps everyone moving.
A 30-employee restaurant group uses this timeline. In early November, the manager asks staff to confirm addresses in the team app. In mid-November, the bookkeeper reviews contractor payments and tip reports. On December 15, managers close out all open timecard corrections. The last payroll of the year is processed on December 22 because of the holiday. On January 5, the bookkeeper reconciles payroll totals with the quarterly returns and updates new minimum wage rates. W-2s go to employees on January 20, well ahead of the deadline, leaving time to fix any errors employees spot.
Accurate year-end payroll starts with accurate hours. EZTime records clock-ins, breaks and overtime by workweek, keeps timecard corrections with an approval trail and exports approved hours for payroll through attendance reports. PTO balances, tip distributions and pay stub distribution are in the same place. EZTime does not file tax forms; your payroll provider or accountant handles filings.
| Check | What to look for |
|---|---|
| Names and SSNs | Match the employee’s Social Security card; fix typos |
| Addresses | Current mailing address for every employee, including those who left |
| Taxable fringe benefits | Added to wages before the last payroll |
| Bonuses and retro pay | Paid in the right year and taxed correctly |
| Quarterly totals | Payroll totals match the quarterly returns |
| Contractor details | Form W-9 on file for every contractor you will report |
Our guide to common payroll errors explains how to fix the issues these checks find.
Year end is also a good time to close out time records. Approve every timecard for the last pay period of the year, resolve missed punches and check that overtime in the final workweek was paid correctly, especially if the workweek crosses December 31. Apply PTO carryover or caps according to your policy and send employees their balances. See how to track employee PTO and PTO carryover.
Tick each task that is already done or scheduled.
0 of 6. January could be stressful. Start the data checks this week.
Generally by January 31 to employees and to the Social Security Administration. If January 31 falls on a weekend, the deadline moves to the next business day, so 2026 Forms W-2 are due February 1, 2027.
Generally when paid. A December bonus paid in January is usually reported in the new year.
Form 941 is the quarterly return for withheld income tax and FICA. Form 940 is the annual federal unemployment tax return.
Generally yes if you paid a nonemployee at least the reporting threshold for services in the year. Check current IRS thresholds.
Federal rules require payroll records for at least three years and time cards for two years under the FLSA, and IRS employment tax records for at least four years. States may require longer.
Many state and local minimum wages change on January 1. Check every location where you have employees.
EZTime does not run payroll, but it exports payroll-ready reports to Excel and PDF so approved hours reach your payroll provider without retyping. See current plans and what each one includes on the pricing page.