Payroll Year-End To Do's

It’s that time of the year to wrap up 2020 payroll duties. Here are a few reminders to help you close out your payroll for the year.

Late November/Early December:

  • Remind employees that if there has been a change in their filing status (e.g. due to marriage, divorce, or dependents), they may want to file a new W-4 and state tax form for 2021

  • Compare previous W-2 with gross wage report

  • Confirm that employee name, address, date of birth, and social security numbers are correct

  • Verify all employees are taxed in their correct state

Before your last payroll of 2020:

  • For tax purposes, checks or electronic payments of wages paid in 2021 are generally 2021 wages, even if earned in 2020

  • Check all Social Security tax withheld. If any employee exceeded the 2020 limit, make an adjustment or refund before making your final tax-year 2020 deposit

  • Verify that all special wage payment and adjustments are correctly posted to 2020 earnings before processing 2020 W-2s. These may include:

  • Non-qualified relocation expense reimbursement;

  • Group term life insurance in excess of $50,000;

  • Third-party sick pay if the employer has responsibility;

  • Manual or voided paychecks not in the payroll system;

  • Personal use of company vehicles, parking and/or company-provided transportation;

  • Employer paid child care;

  • Company-paid educational assistance;

  • Bonuses;

  • Non-cash payments.

After your last payroll of 2020, but before the first payroll of 2021:

  • Process W-4s submitted for 2021

  • Review discrepancies such as missing addresses, and missing Social Security numbers

  • Check for excess contributions to qualified plans, including 401(k), 403(b), especially for highly-compensated employees

  • Check accumulators – Make sure the year to date numbers are zeroed out

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Kiwi Partners | 237 West 35th Street, #1101, New York, NY 10001 | 212.532.7171