Managed Payroll · Year-End Payroll Services

Year-End Payroll Services: The Checklist, the Reconciliation, and the Filing

Year end is where four quarters of small payroll mistakes surface at once, as a W-2 that does not match the 941s. BEG reconciles every quarter, files W-2s and 1099-NECs by the IRS deadline, and handles the 2026 reporting changes for qualified tips and qualified overtime, inside your existing platform or on isolved, at $25-$45 per employee per month.

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Year-end payroll checklist, W-2 and 1099 filing handled for employers

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Feb 1, 2027W-2 and 1099-NEC deadline for 2026 wages

$25-$45Per employee per month, all-inclusive

No surchargeYear-end filing is not a separate fee

TL;DR

January 31, 2027 falls on a Sunday, so W-2s and 1099-NECs for 2026 wages are due Monday, February 1, 2027. The 2026 Form W-2 also carries new reporting for the One Big Beautiful Bill Act's qualified tips and qualified overtime deductions. BEG reconciles all four quarters of your 941s to your W-2 totals, applies the new box codes correctly, and files everything under your EIN, included in managed payroll at $25 PEPM in your existing platform or $45 PEPM on isolved, with a $500 monthly minimum and no year-end surcharge.

Year-End Payroll Checklist

What has to happen before you can file

Six things, in order: verify employee data, reconcile every quarter, apply the new 2026 box codes, true up benefits and fringe, close out contractors, and file. Skipping the order is how a W-2 mismatch letter shows up in July.

Verify employee data

Confirm current legal name, address, and Social Security number for every employee on payroll during the year, including anyone who left. A mismatch here is the single most common cause of a rejected W-2 e-file.

Reconcile all four quarters

Tie total wages, federal withholding, and Social Security and Medicare tax on all four Forms 941 to what the W-2s are about to report. Any gap has to be explained and, if it is a real error, corrected before filing, not after.

Apply the 2026 box code changes

Qualified tips reported to the employer go in new Box 12 Code TP, qualified overtime compensation goes in new Box 12 Code TT, and Box 14 splits into 14a (Other) and a new 14b for Treasury Tipped Occupation Codes. Get these wrong and the employee cannot claim the deduction correctly on their return.

True up benefits and fringe

Group-term life over $50,000, personal use of a company vehicle, S-corp owner health premiums, and any other imputed income needs to land in taxable wages before the final run of the year, not as a January correction.

Close out contractors

Confirm which contractors crossed the 2026 $2,000 reporting threshold for Form 1099-NEC, verify W-9s are on file for each, and flag any contractor whose actual working relationship looks like an employee's before the 1099 goes out.

File W-2s, W-3, and 1099s

W-2s and 1099-NECs go to recipients and to the Social Security Administration and IRS. For 2026 wages, that date is February 1, 2027, since January 31 falls on a Sunday. Electronic filing is required once you file 10 or more information returns of any type in the year.

The Actual Deadline

When are W-2s and 1099-NECs due for 2026 wages?

February 1, 2027. The standard January 31 deadline falls on a Sunday in 2027, and IRS rule pushes any due date that lands on a weekend or legal holiday to the next business day.

Form W-2 and Form 1099-NEC are both due to recipients and to the government by January 31 following the tax year, or the next business day when the 31st falls on a Saturday, Sunday, or legal holiday. January 1, 2027 falls on a Friday, which makes January 31, 2027 a Sunday. The next business day is Monday, February 1, 2027, and that is the real filing deadline for wages and nonemployee compensation paid in 2026. See the IRS Topic 752 on W-2 filing for the general rule and confirm the exact current-year date on the IRS employment tax due dates page before you file, since IRS guidance is occasionally updated after a page like this one is published.

This is not a grace period to plan around. It is the actual statutory deadline shifted by one calendar rule. Treat February 1, 2027 as January 31 for every internal purpose, since it leaves zero cushion if anything needs a same-day correction.

New for Tax Year 2026

What changed on the W-2 for qualified tips and qualified overtime

The IRS released the 2026 Form W-2 on January 9, 2026 with three new Box 12 codes and a split Box 14, built to support the One Big Beautiful Bill Act's new deductions for qualified tips and qualified overtime.

Box	What it reports	Notes
Box 12, Code TP	Total cash tips reported to the employer during 2026	Supports the employee's qualified tips deduction, up to $25,000 per year
Box 12, Code TT	Total qualified overtime compensation for 2026	Supports the qualified overtime deduction, up to $12,500 single or $25,000 joint per year
Box 12, Code TA	Employer contributions to a Trump account	New account type under the same legislation, unrelated to tips or overtime
Box 14a	Other (the former, single Box 14)	State disability tax, union dues, uniform payments, and similar items as before
Box 14b	Treasury Tipped Occupation Code(s), up to two	New box. Populated only when Box 12 Code TP is also reported. Use code 000 if a reported tip did not come from a qualifying occupation

Both deductions phase out for taxpayers with modified adjusted gross income over $150,000, or $300,000 for joint filers. Source: PayrollOrg, reporting on the IRS's January 9, 2026 release of the 2026 Form W-2, and the IRS overview of the qualified tips and qualified overtime deductions. Final IRS instructions for the 2026 Form W-2 had not been released as of this writing. Confirm the finalized box instructions before your first 2026 payroll run that includes tipped or overtime-eligible employees.

Reports and Reconciliation

What a year-end payroll reconciliation actually checks

Every quarter's 941 has to tie to the annual W-2 totals, wage by wage and tax by tax. A mismatch is the single most common trigger for an IRS or Social Security Administration notice the following year.

941-to-W-2 Tie-Out

Four quarters, one number

Total wages, federal income tax withheld, and Social Security and Medicare wages and tax across all four Forms 941 must equal what the W-2s report for the year. BEG runs this tie-out before a single W-2 is transmitted.

State Reconciliation

Every state you paid wages in

State withholding and unemployment wage reports need their own annual reconciliation against what was actually deposited, state by state, before state copies of the W-2 go out.

Year-End Payroll Reports

What ownership actually asks for

Total payroll cost by department, employer tax liability for the year, benefits deductions summary, and a full census for the accountant preparing the year-end financials. BEG produces these as part of the service, not a special request.

W-2 Filing Service

Transmission, not just preparation

BEG e-files W-2s and W-3s with the Social Security Administration and files 1099-NECs with the IRS, under your EIN, with corrected W-2cs and 941-Xs issued at no extra cost if the error was on BEG's side.

One More Thing to Check

Does 2027 change your per-paycheck deduction math?

Almost every biweekly employer runs 26 paydays in 2027, not 27. Confirm which one applies to you before finalizing 2027 benefit deductions and 401(k) elections at year end.

The exact rule, and the one first-payday date that produces a 27th paycheck, is covered in is 2027 a 27-pay-period year?

Pricing

What year-end payroll service costs with BEG

Included in managed payroll, not billed as a separate year-end project.

$25 PEPM

Inside the payroll platform you already have

Full-year processing, quarterly 941 reconciliation, W-2 and 1099-NEC filing, and the 2026 box code changes, all included. No migration required.

$45 PEPM

On the BEG isolved platform, all-inclusive

The system and the managed service in one rate, including employee self-service access to W-2s. No implementation fee.

A $500 monthly minimum applies. There is no separate year-end surcharge, no per-W-2 fee, and no per-1099 fee. Full detail on managed payroll pricing.

Why Year End Is Where Errors Surface

A payroll mistake made in March does not usually trigger a notice in March. It sits quietly until the W-2 is built from a full year of data that does not tie out, and the mismatch letter arrives from the IRS or the Social Security Administration months later, with interest already running. Reconciling every quarter as you go, not just in January, is what actually prevents this.

Before Your Last Payroll of 2026

Confirm tipped and overtime-eligible employees are flagged correctly for the new Box 12 codes, confirm contractor 1099 status, and true up any fringe benefits. BEG can take this over mid-year or start clean for 2027, live in 3-5 business days.

FAQ

Common questions about year-end payroll services

What is on a year-end payroll checklist?

Verify employee data, reconcile all four quarterly 941s to the W-2 totals, apply the current year's W-2 box changes, true up fringe benefits and imputed income, confirm contractor 1099 status, then file W-2s, the W-3, and 1099-NECs by the deadline.

When are W-2s and 1099s due for 2026 wages?

February 1, 2027. The standard January 31 deadline falls on a Sunday in 2027, and IRS rule moves it to the next business day, Monday, February 1, 2027.

What is a year-end payroll reconciliation?

The process of confirming that total wages and taxes across all four quarterly Forms 941 match what the W-2s report for the year, plus a matching reconciliation against state withholding and unemployment filings. A gap between the two is the most common cause of a mismatch notice.

What changed on the 2026 W-2 for tips and overtime?

Three new Box 12 codes: TP for total cash tips reported to the employer, TT for qualified overtime compensation, and TA for Trump account contributions. Box 14 also split into 14a (Other) and a new 14b for Treasury Tipped Occupation Codes, populated only when Code TP is used.

Is a W-2 filing service included in managed payroll, or billed separately?

Included. BEG's $25-$45 PEPM rate covers processing, quarterly filings, and year-end W-2 and 1099-NEC filing with no separate year-end charge and no per-form fee, subject to the $500 monthly minimum.

Can BEG take over payroll mid-year and still handle year end correctly?

Yes. BEG reconciles the prior periods against what the previous provider ran, confirms the totals tie out, and takes on year-end filing for the full year. Live payroll runs 3-5 business days from signing.