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The Simple Year-End Payroll Checklist You Need

Quarter four can be a stressful time of year for businesses. A particularly stressful quarter four responsibility is dealing with year-end payroll procedures. Here at Launchways, we understand year-end payroll procedures can be complex and time-consuming. That’s why we decided to put together a simplified payroll checklist to help you tackle year-end payroll like a pro.

Year-End Payroll Checklist*


1. Check employee and employer data:

  • Verify the employer and employee data that is used in processing your quarterly tax reports and W-2s. view the “Quarterly Tax Verification Letter” is the document which displays this critical data.
  • To which employees does the “retirement plan” indicator in Box 13 of Form W-2 apply?
  • Confirm that employee names and Social Security numbers are in the correct format.

2. Check wage, tax and benefits data:

  • Confirm that deferred compensation plan type is correct and verify employee contribution amounts.
  • Check that Group-Term Life Insurance adjustments have been updated and submitted.
  • Ensure that other special tax items have been updated and submitted, such as Other Compensation, Third-Party Sick Pay, Employee Business Expense Reimbursements, Taxable Fringe Benefits, Tip Allocation information, and Dependent Care Benefits.
  • Verify the employer state unemployment insurance tax rate and taxable wage limit for each state.
  • Compute uncollected Social Security and Medicare taxes for retirees and former employees.
  • Verify that withholding has been made properly, or withhold from the final paycheck for taxable fringe benefits. These may include:
    • Group-term life insurance in excess of $50,000
    • Third-party sick pay (is the third party issuing a W-2?)
    • Personal use of company vehicle
    • Non-qualified moving expense reimbursements
    • Company-provided transportation or parking
    • Employer-paid education not related to the employee’s job
    • Non-accountable business expense reimbursements or allowances
    • Bonuses
    • Non-cash payments

3. Check for special procedures:

  • Schedule any special bonus payrolls for the current year.
  • Request any special reports needed for year end.
  • Ensure adequate payroll supplies to complete the year and to begin the new year, including blank checks, payroll forms and blank Forms W-2.
  • Determine whether all adjustments are applied or that an adjustment payroll has been scheduled.
  • Remind employees to fill out a new Form W-4 if their situation has changed.
  • Obtain new Forms W-5 for Advance Earned Income Credit (EIC) for the new year.
  • Confirm that all “manual” checks written during the year have been accounted for and updated in the system.
  • Determine that all voided or reversed paychecks have been accounted for in the system.

*Please note: this checklist is meant to provide basic guidelines only. Payroll procedures and requirements will vary business to business.

Looking for extra payroll support? Launchways is here to help. Connect with a Launchways team member today to learn more about our payroll outsourcing solutions.

Everything You Need to Know about the New W-4 Form for 2019

The W-4 form is used by employers to withhold the proper amount of federal income taxes from employees’ paychecks. The Internal Revenue Service (IRS) recommends that employees submit a new W-4 every year or anytime their financial situation changes significantly. The IRS recently published a preliminary draft of the new W-4 form for 2019. The finalized version of the new W-4 form will likely come out by the end of the summer.

The recent federal tax overhaul significantly changed how individual income taxes are calculated. This directly effects the method for figuring out withholding, meaning employers needed an updated W-4 to ensure calculations would be correct. In an ideal world, if an employee follows the instructions on the W-4, it will determine a withholding amount close to their income tax liability. Although it’s not an exact science, the new W-9 form aims to closely mirror the new tax code so that employee withholdings will be accurate.

Major Tax Changes

Although the official final draft of the new W-9 form has yet to be released, the preliminary draft has several key withholding changes including:

  • Method of structuring withholding: the approach to withholding will change significantly, with more emphasis being put on individual income tax liability rather than the number of allowances.
  • Incremental tax rates: in the new W-4 form, it prompts the highest paying job in the household to disclose any additional family income, including tax credits individuals anticattle claiming.
  • Online aids: the IRS plans to offer an online withholding calculator for employees who don’t want to disclose their financial information to their employer or who have more complex tax situations.
  • New W-4s not required: the IRS plans to encourage the use of the W-4, but not mandate it. New withholding methods will be designed to be backwards compatible with previously filed W-4s.
  • New hires: employees who do not sign a W-4 as new hires will calculate withholding as though single, claiming no adjustments.
  • Detailed instructions: the IRS will provide a detailed instruction page to assist employees in filling out the new W-4.

What Should Employers Do

As an employer, you should take the following steps:

  • Wait on the final word from the IRS on the new withholding rules and W-4 form.
  • Support the new withholding methodologies and use the new W-4 form, even though it’s not required.
  • Ensure withholding are adjusted appropriately for employees who choose to complete a new W-4.
  • Stay alert for the finalized withholding structure and new W-4 form for 2019. Ensure your payroll system can support the requirements.
  • Make sure to double-check state tax code changes. Oftentimes when there is a major federal tax withholding change, states will have to decide how to adapt to the federal process.