For most local government finance teams, year-end pressure peaks in January. W-2s are due to employees and the Social Security Administration by February 1, 2027, and ACA forms follow in February and March. Starting your year-end prep in October gives you three months to catch and fix problems before those deadlines.
The 2026 tax year also brings a new W-2 requirement, as employers must now report qualified overtime separately. This year-end payroll forms checklist covers that change, along with the year-end steps your team already knows. If your organization also issues 1099s, the IRS is changing how those are filed this year too.
1. Confirm your federal e-filing registrations
Organizations that file 10 or more information returns in total must file electronically. Each form type uses a different federal system, and each requires its own login or code:
- W-2s: a Business Services Online (BSO) account with the Social Security Administration
- 1095s (ACA): a Transmitter Control Code (TCC) through the IRS AIR system
- 1099s, if you issue them: an IRIS Transmitter Control Code
Activation can take several weeks, so apply or confirm access now rather than in January.
2. Prepare for new overtime reporting on the W-2
Starting with 2026 pay, employers report qualified overtime compensation in Box 12 of the W-2 using the new code TT. Qualified overtime is generally the premium portion of FLSA-required overtime, the "half" in time-and-a-half. Check that your payroll system tracks that premium separately so the amount can be reported accurately.
3. Verify quarterly reports and make corrections early
As you file third-quarter reports, confirm that the first three quarters still match what you originally reported and deposited. Catching a mismatch now gives you time to file a correction before W-2s are due.
4. Audit employee records
Verify names, mailing addresses and Social Security numbers for every employee, including those who left during the year. Fixing errors at this stage saves you from issuing corrected W-2s (Form W-2c) after the originals go out.
5. Check benefits and ACA coding
Open enrollment is a good time to confirm each employee's health coverage settings and the codes needed for Form 1095-C. Also confirm that retirement and benefit deductions have been recorded correctly all year.
6. Start reconciling payroll before year-end
Balancing payroll and accounts payable through October leaves just November and December to review once deadlines are close. Compare year-to-date federal and state withholding, Social Security and Medicare totals to your quarterly Form 941 filings and tax deposits, so your W-2 totals will match when you file.
7. Confirm whether you need preprinted forms
Organizations that file 10 or more information returns must file electronically and don’t need preprinted forms, since many payroll systems can print employee copies on plain paper. If your organization files fewer than 10 returns on paper, order preprinted forms early so they arrive in time.
8. Plan for coverage and updates
Confirm who will handle year-end if your payroll clerk is unavailable, and document the process now. Coordinate with IT so any year-end software updates are installed before your final payroll run.
A smoother year-end starts now
Working through these steps between now and Thanksgiving gives your team room to catch problems while there’s still time to fix them, and it makes the February deadlines much more manageable.
Caselle customers: visit the Caselle year-end page for this year’s deadlines, checklists and webinar registration. Step-by-step instructions are in the Caselle Knowledge Base, including the printable employee copy layout:
If your payroll clerk leaves, your team is short-staffed, or you’d rather hand off year-end entirely, Caselle Back-Office Services can handle your year-end payroll filing, W-2 reporting and balancing.
Get a Quote
