December: verify employee information
Ask every employee to confirm their legal name, address and Social Security number as they should appear on their wage statement. Compare it with your payroll records. Incorrect numbers cause rejected filings. Also confirm mailing addresses or the agreement to receive statements electronically.
Hiring in another state? Employer registration in another state.
Remove or mark terminated employees properly so you do not send statements to old addresses or forget them.
December: review the year's payroll
Print a year-to-date summary and look for odd items: an employee with no withholding, wages higher than expected, or a month with a missing run. Check bonuses, commissions and reimbursements are coded correctly, since taxable and non-taxable items are treated differently.
Confirm that benefits such as health insurance, retirement contributions or personal-use items are set up so they show correctly on the statements. Ask your provider how they display them.
Decide the timing of the last payroll
Wages are generally reported for the year in which they are paid. If a payday falls near the year boundary, the pay date, not the work period, usually controls. Your advisor can explain how this affects bonuses and accrued wages for your situation.
Run the last payroll of the year with the correct date, and avoid back-dating or altering dates to move wages across years.
January: reconcile and file
Compare the total wages and taxes on the four quarterly returns to the annual totals on the wage statements. They should agree. If they do not, find the cause before filing. Typical causes are corrected paychecks, late payroll entries or manual checks not recorded.
Wage statements go to employees and to the government by deadlines that usually fall at the end of January. Verify the current date and the filing method. Keep copies of the filing confirmation.
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After filing
Store the final reports, the filed forms and the reconciliation together. Update the books for any adjustments and close the payroll liability accounts for the year if the balances are zero. If an employee reports an error, correct it promptly and ask your provider about the corrected form process.
Begin the new year by collecting updated withholding forms from employees who have had changes in their circumstances.
Tasks people forget
Several items slip through each year. Employees who changed names need the new name reported correctly. Terminated employees may need to receive statements at a forwarding address. Third-party sick pay, taxable gifts and personal use of a company vehicle may need to be included in wages. Tips and reimbursements deserve a look, too.
Ask your provider for a year-end checklist and compare it to yours. Providers often publish one with the dates that apply for the year.
Worked example with numbers
Payroll reports show annual wages of $186,400 across six employees. The W-2 totals should add to the same figure, and employer tax liabilities should match the deposits made. If W-2 totals come to $185,900, the $500 gap may be a bonus paid late in December or a reimbursement coded as wages. Fix it before filing.
Mistakes that cost money
Confirming addresses and Social Security numbers too late. Mismatching the last payroll's date and the year it belongs to. Not reconciling to the quarterly returns.
Check your work
Tie wages, withholding and employer taxes from the four quarterly returns to the annual totals.
Common questions
What if an employee did not receive their statement?
Confirm the address and reissue it. Your provider can often resend or provide an electronic copy.
Should contractors be included?
No. Contractors receive different forms. See our 1099-NEC guide.
Can I fix a mistake after filing?
Corrected forms exist for this purpose. Ask your provider or CPA how to file them.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.
