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Year-end payroll checklist for small employers

Everything that has to happen between your last December paycheck and the February 1 deadline, in order, with what payroll software does for you and what’s still yours.

Shanin Drucquer

Shanin DrucquerGusto user since 2024 · Updated October 2026

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Short answer

W-2s, the W-3, 1099-NECs, and the fourth-quarter Form 941 for 2026 are all due February 1, 2027, because January 31 falls on a Sunday. Most of the work is in December: final paychecks, bonuses, and clean employee records.

Feb 1

2027 deadline for W-2s, W-3, 1099-NECs, and Q4 Form 941

Feb 10

Form 941 and 940 deadline if every deposit was on time

$2,000

1099-NEC threshold for 2026 payments, up from $600

$192,300

2027 Social Security wage base, up from $184,500

Have these ready

  • Bonus amounts and who gets them
  • Payments made outside payroll this year, to employees or contractors
  • Health premiums the business paid for S corp owners, if any
  • Any rate notices from your state unemployment agency

  1. Step 1 of 8 · 10 min

    Run your last 2026 payrolls and bonuses

    A W-2 reports wages by the date they’re paid, not the dates worked, so a bonus paid January 4 lands on next year’s W-2. Count back from December 31 using your deposit speed. For bonuses, a separate bonus payroll lets you use the flat 22% federal withholding rate instead of the regular rate.

    Gusto has a Year-End Checklist in the app. Work through it alongside this list.

    Gusto

    December payrolls

    Pay dates in 2026

    • Regular · pay date Fri, Dec 18Paid
    • Holiday bonus · pay date Wed, Dec 23Submitted
    • Regular · pay date Thu, Dec 31Run by deadline
    Screens are recreated with example data.

  2. Step 2 of 8 · 10 min

    Record anything paid outside payroll

    Enter any manual checks or off-cycle payments so year-to-date totals match what people were paid. Fill in Gusto’s special compensation survey for taxable fringe benefits, and add health premiums the business paid for S corp owners above 2%, which belong on their W-2.

    Commonly missed

    • A paycheck you wrote by hand
    • Contractor payments made by app or check
    • S corp owner health premiums

  3. Step 3 of 8 · 15 min

    Check names, SSNs, and addresses

    Year-end forms go out under whatever is on file. Check every legal name, Social Security number, and home address, including people who left during the year, and make sure they’re marked as dismissed. For contractors, check that each one has a signed W-9 and the right taxpayer ID.

    Gusto

    Team info

    Before W-2s go final

    • Maria L. · SSN and addressChecked
    • James R. · dismissed in AugustChecked
    • Ana P. · new addressUpdate

  4. Step 4 of 8 · 10 min

    Review draft W-2s

    Download the drafts from Taxes & Compliance, then Tax documents. Totals should match your payroll summary for the year. Final forms appear by mid-January. For 2026, the W-2 adds new box 12 codes for qualified overtime (TT) and cash tips (TP), and box 14 splits in two, so tipped workers and anyone with overtime may see new entries.

    How the new overtime and tip amounts affect your employees’ taxes is a question for your accountant, not the W-2.

  5. Step 5 of 8 · 5 min

    Get W-2s to employees by February 1

    Gusto files the W-2s and W-3 with the Social Security Administration and sends state and local copies itself. Getting copies to employees is still on you: have Gusto mail them (order by January 23), mail or hand them out yourself, or deliver them electronically to employees who agreed to that.

    Watch out

    Employees without a paperless choice get paper by default. They have until January 16, 2027 to choose paperless in Gusto.

    Gusto

    Distribute 2026 W-2s

    Due Mon, Feb 1, 2027

    • Gusto mails them to employees
    • I’ll download and distribute them

    Continue

  6. Step 6 of 8 · 5 min

    Send 1099-NECs to contractors

    Same deadline: February 1, 2027, for both the contractor’s copy and the IRS filing. For 2026 payments, the IRS threshold is $2,000 per contractor. Gusto files for everyone you paid through it; you choose how contractors get their copy.

  7. Step 7 of 8 · 3 min

    Confirm the Q4 941 and the 940

    The fourth-quarter Form 941 and the annual Form 940 for federal unemployment are due February 1, 2027, or February 10 if every deposit was made on time. Gusto files both from your payroll, so your job is to make sure every payroll this year ran through it.

  8. Step 8 of 8 · 5 min

    Set up for 2027

    Gusto withholds state unemployment tax at the rate in your account, so when your state mails your 2027 rate, enter it before the first payroll of the year. The Social Security wage base rises to $192,300 for 2027. Check your state’s 2027 minimum wage too.

    Open Gusto
“Gusto files my payroll taxes, and both times a tax notice showed up, they sorted it.”
Shanin Drucquer, Iconic Landscaping

Every deadline for 2026 forms

January 31 is the usual date for most of these. In 2027 it’s a Sunday, so each moves to the next business day.

FormGoes toDueFiled by Gusto?
Last 2026 paycheckEmployeesPay date by Dec 31, 2026You run it
W-2EmployeesFeb 1, 2027You choose delivery
W-2 and W-3Social Security AdministrationFeb 1, 2027Yes
1099-NECContractors and the IRSFeb 1, 2027Yes, you choose delivery
Form 941, Q4IRSFeb 1, 2027 (Feb 10 if deposits were on time)Yes
Form 940IRSFeb 1, 2027 (Feb 10 if deposits were on time)Yes

From the IRS instructions for each form and Gusto’s help center, checked October 28, 2026. State deadlines vary.

If you’re going to miss it

There’s no automatic extension for W-2s or 1099-NECs. The IRS grants one 30-day extension to file W-2s with the SSA, on Form 8809, only in extraordinary circumstances. More time to give employees their copies takes a separate request on Form 15397, usually for no more than 15 days.

Starting in December leaves time to fix a wrong address or a missing payment before the forms go final in January.

Common questions

When are W-2s due for 2026?

February 1, 2027. The usual deadline is January 31, which falls on a Sunday in 2027. That date covers both giving employees their copies and filing with the Social Security Administration.

When are 1099s due for 2026?

Form 1099-NEC is due February 1, 2027, to both the contractor and the IRS. The threshold for 2026 payments is $2,000 per contractor.

Does Gusto file W-2s and W-3s?

Yes. Gusto files W-2s and the W-3 with the Social Security Administration and sends state and local copies. You choose how employees get their copies: Gusto mailing, your own mailing, or electronic delivery with consent.

Does a bonus paid in January count for last year?

No. W-2s report wages in the year they’re paid. A bonus with a January pay date goes on the next year’s W-2, even if it was earned in December.

Can I get an extension on W-2s?

Not automatically. Form 8809 requests 30 more days to file with the SSA, granted only in extraordinary circumstances. Form 15397 asks for more time to give employees their copies, generally up to 15 days.

What changes for payroll in 2027?

The Social Security wage base rises to $192,300. Your state may send a new unemployment tax rate and set a new minimum wage, so check both before your first 2027 payroll.

Sources: IRS: General Instructions for Forms W-2 and W-3, IRS: Instructions for Form 941, IRS: Instructions for Form 940, IRS: Instructions for Form 1099-NEC, SSA: contribution and benefit base, Gusto: distribute W-2s to employees, Gusto: state unemployment insurance tax, Gusto: year-end payroll checklist.

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