Year-end payroll, done right
before the deadlines.

When are W-2s and 1099-NECs due?

Both W-2s and 1099-NECs have a January 31 deadline for two parallel requirements: (1) furnishing the forms to employees (W-2) and contractors (1099-NEC), and (2) filing them with the federal government (W-2s with the Social Security Administration; 1099-NECs with the IRS). Most U.S. states also require state W-2 filings by January 31 or shortly after. The January 31 deadline is firm: late filing penalties begin at relatively small per-form amounts and escalate with delay duration. State 1099 filing requirements vary — some states accept federal 1099 filing as sufficient; others have separate state-level 1099 filing requirements with their own deadlines.

What does year-end payroll actually involve?

Year-end payroll spans approximately late November through mid-March and includes far more than W-2 generation. The full scope: pre-year-end reconciliation (verifying year-to-date wage and tax accumulations are accurate before final payroll); year-end adjustments (bonus payments with supplemental withholding decisions, fringe-benefit additions to W-2 income, group-term life insurance over $50,000, third-party sick pay reconciliation, S-corporation owner health insurance adjustments); final December payroll execution; W-2 generation and distribution to employees by January 31; 1099-NEC generation and distribution to contractors by January 31; federal W-2 filing with SSA and 1099-NEC filing with IRS by January 31; state W-2 transmittal filings (varies by state, most by January 31); Q4 Form 941 verification; Form 940 FUTA filing (typically due January 31 with possible extension to February 10 if FUTA was deposited on time during the year); and W-2c amended form preparation for any prior-year corrections that surface during employee tax-return season.

What are common year-end payroll mistakes?

The most common consequential mistakes cluster around year-end adjustments that don’t surface during regular payroll cycles. Top patterns: (1) missing fringe-benefit additions to W-2 box 1 wages (personal use of company vehicle, employer-provided housing, taxable awards) — these need to be added to wages with proper tax withholding before year-end; (2) incorrect group-term life insurance handling (the cost of coverage above $50,000 is taxable to employees and needs to be added to W-2 income in box 12 with code C); (3) third-party sick pay not reconciled (insurance companies that paid sick pay during the year report wages on their own; this needs reconciliation against employer records); (4) S-corporation owner health insurance not added to W-2 box 1 with reporting in box 14; (5) bonus payments treated as regular wages instead of supplemental wages (different withholding rules apply); (6) state-specific year-end reconciliation requirements missed (some states have separate annual reconciliation forms beyond standard quarterly filings). Each of these requires W-2c amendment if missed and discovered later.

How much does year-end payroll service cost?

TechBrot year-end payroll engagements are fixed-fee. Standard year-end for a small business with under ~25 W-2 employees, minimal year-end adjustments, and operations in 1–2 states typically scopes in the $1,500–$3,500 range. Larger businesses (25–100 employees), multi-state operations, or businesses with significant year-end adjustments (bonuses, fringe benefits, GTL, third-party sick pay) typically scope $3,500–$7,500. Complex year-end including W-2c amendments for prior-year corrections, post-year-end employee disputes, or restructuring multiple prior-year errors typically scopes $7,500+. Per-employee components scale with W-2 count; per-1099 components scale with contractor count. Pricing is always written before any work begins; engagement timing is critical given the January 31 deadline.

What happens if W-2s have errors after they’re filed?

Errors discovered after W-2s are filed are corrected through Form W-2c (Corrected Wage and Tax Statement) filed with the Social Security Administration, along with Form W-3c (Transmittal of Corrected Wage and Tax Statements). Common error-correction scenarios: employee finds discrepancy when preparing personal tax return, employer realizes a fringe benefit was missed, employer discovers incorrect Social Security number for an employee, employer needs to correct wage amounts. W-2c filing has no specific deadline (unlike the original W-2 deadline) but should be filed as soon as the error is identified. The corrected W-2c is furnished to the employee, and the employee may need to file an amended personal tax return depending on the magnitude of the correction. W-2c work is a distinct engagement that typically scopes per-correction or as part of broader prior-year payroll cleanup.

Does QuickBooks Payroll automatically generate W-2s and 1099-NECs?

Yes, but the automation only works correctly if the underlying year-to-date data is accurate. QuickBooks Payroll automatically generates W-2s based on accumulated year-to-date wage and tax data for each employee, and 1099-NECs based on contractor payment totals. The forms can be e-filed directly through QuickBooks Payroll (at higher tiers) and printed/mailed to employees through QuickBooks-integrated services or Intuit’s W-2 print-and-mail option. The catch: the forms are only as accurate as the underlying data. If year-end adjustments weren’t made (fringe benefits, GTL, third-party sick pay), if employee classifications are wrong, if wage-base configurations had errors during the year, the W-2 and 1099 forms will inherit those errors. Most year-end work is verifying the underlying data is correct before the automated form generation runs.

What’s the difference between 1099-NEC and 1099-MISC?

Form 1099-NEC (Nonemployee Compensation) and Form 1099-MISC (Miscellaneous Information) report different categories of payments and were separated starting with the 2020 tax year. 1099-NEC reports payments to independent contractors and other nonemployees for services performed in the course of business (typically $600+ paid to a contractor during the year). 1099-MISC reports other payments including rents, prizes and awards, medical and healthcare payments, attorney payments not for services, fishing boat proceeds, and certain other categories. The vast majority of small-business 1099 reporting goes on 1099-NEC for contractor payments. 1099-MISC applies in narrower cases (paying rent to a landlord, certain prize payments, attorney settlements, etc.). Both forms have a January 31 deadline for furnishing copies to recipients; 1099-NEC files with IRS by January 31, while 1099-MISC has slightly later IRS filing deadlines depending on filing method.

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