2024 Year-End Payroll Reminders
The year-end period is demanding for business owners, particularly when managing payroll requirements and deadlines. PayWorks has compiled this comprehensive checklist of payroll tasks that need to be completed by the beginning of the new year and some helpful reminders for business owners.
Last 2024 Processing Date
The last day to run payroll or adjustments affecting 2024 employment tax returns and W-2 forms will be Friday, December 27, 2024, at 3:00 p.m. EST.
Update Employee Addresses
It is important to maintain accurate employee addresses for W-2 purposes. Incorrect addresses may cause W-2 forms to be delayed or returned, and charges can be incurred for reprints. If the payroll system recognizes any missing information, you will receive a report attached to the payroll package. Also, please remind your employees to update their addresses if necessary, including any apartment number if applicable. Your Account Representative can provide a list of all your active and terminated employees if you want to verify our information on file.
Bonus Checks
Bonus checks can be processed in various ways based on your preferences.
Regular payroll or through a separate payroll processing run: Bonus checks can be run with a typical payroll check date or a special payroll processing with a different check date. Either way, the amount can be shown as a "Bonus" or a description of your choosing on the employee pay statements. If processed with regularly scheduled payroll, bonus checks can be added to the regular check or issued as a separate check. If using direct deposit, you can also process live checks on an exception basis.
For a specific net amount: We can do a "gross-up" calculation if you'd like a specific net amount on the bonus check. Should you wish to use this method, please submit the figures to us at least one day prior to the processing day. Bonuses for specific net amounts must be processed as a separate check.
Taxation method: The IRS considers bonus payments to be supplemental wages and defines two taxation options for federal income tax. They can be taxed using the standard W-4 calculations or at a flat 22%. Payments exceeding $1 million will be taxed at a flat 37%. Each state defines its own methods for supplemental pay, such as bonuses. Your Account Representative will review those options with you.
Deductions: Determine which, if any, deductions should be taken on the bonus payments. Items to consider are retirement plan contributions, insurance deductions, loans, garnishments, etc.
Funding for High-Dollar Payments: If using direct deposit and the payroll run exceeds $500,000 and/or an individual entry exceeds $100,000 (net), a wire transfer must fund the direct deposit.
Form 1099-NEC
If PayWorks has paid your independent contractors during the course of the year, we will ask you to confirm if you wish to observe the mandated filing threshold amounts or have us issue a 1099-NEC to all independent contractors. The forms will be billed at the same fee as W-2 forms. The due date for filing the 1099-NEC is January 31.
For those clients who have paid their independent contractors on their own and would like PayWorks to create and file either 1099-NEC or 1099-MISC (rents, royalties, etc.), please get in touch with your Account Representative regarding data submission and pricing.
Third-Party Sick/Disability Pay
If any employee (current or former) collected disability payments from the state insurance fund or a private insurance carrier, those payments need to be reported for employment tax purposes on your payroll account. The taxable portion of these payments must be included on the employer's Form 941 calculations and state tax returns as applicable.
Disability payers will typically notify employers of the payee and payment amount for payments made during the year. If you haven't done so, please forward these notifications to PayWorks immediately. Each disability payer must also provide a recap to employers of all payments made in the 2024 calendar year by January 15, 2025.
If any of your employees collected disability in 2024, and you have not forwarded the periodic payment amounts to PayWorks, please notify us so we can hold the filing of the quarterly reports and printing of the W-2 forms. If PayWorks is not notified and the quarter has been closed, any additional entries will result in a minimum reprocessing fee of $300 plus the reprinting of all W-2 forms at $7.50 per form.
Non-Cash Taxable Fringe Benefits
If you provided non-cash taxable fringe benefits to employees during the year, the value of those benefits must be reported and, in most cases, taxed through the payroll. If you are unsure if non-cash benefits are reportable, please check with us and your accountant. Examples of these types of benefits include, but are not limited to:
Personal use of company vehicle
Group term life or other employer-provided insurance with W-2 reporting implications
S-Corp 2% shareholder health insurance premiums
Paid Time Off Accruals
Please review your paid time off policies regarding carry-over and pay-out options. These options are typically defined by either state-mandated plan requirements or your company policy. You can refer to the Accrual Report in your latest payroll report package if you requested accrual tracking as part of your payroll services. Please contact your Account Rep to discuss your options.
W-2 Delivery
We anticipate that employee W-2 forms will be ready for shipping by mid-January. We offer three delivery options to choose from:
With your standard payroll delivery
Via Priority Mail to your office as soon as they are printed and packaged
Mailed directly to the recipients
Please let your Account Representative know your choice so we can expedite delivery when the forms are ready.
Your Annual Report email from PayWorks will also include employee copies. These digital versions will allow you to print copies if an employee requests one at a later date. However, if you would like PayWorks to reprint or resend a physical copy, there will be a $5.00 fee plus postage. For security purposes, any W2 reprint requests must be made through you to your Account Representative. Requests made directly to PayWorks by the employee will not be honored since we can't verify the employee's identity.
Holiday Processing Schedules
PayWorks will be closed on Wednesday, December 25, and Wednesday, January 1, 2025, which are also bank holidays. If you are using our tax filing or direct deposit services, we must run the payroll two business/banking days before the check date to make the appropriate funds transfers on schedule. An exception can be made for direct deposit, but the transfer agent charges a fee of $35.00 for a 24-hour window.
Please keep in mind that the payroll check date determines in which year it is reported for payroll tax purposes. If you need a payroll to appear in the 2024 tax reports or W-2s, it must be processed with a check date by December 31. Please schedule it with your Account Representative accordingly.
Priority Mail Delivery
Due to the volume of mail handled during the holidays and the possibility of inclement weather, your payroll reports may be delayed if you use this service. We cannot guarantee delivery day and time once the Post Office receives the package. Your account representative can forward your tracking number if you would like to track the package. Please consider on-site printing (we supply the check stock and envelopes) or emailed pay statements as alternatives to hard copy delivery. The post office also increases postal rates during the holidays, so your postage fee will be adjusted accordingly.
2025 Minimum Wage
States will often increase their minimum wage effective for the first of the year. If you currently have employees paid minimum wage, please contact your account representative or click here for the latest information from the Department of Labor regarding any new minimums. These will not change your employees' pay records automatically.
Contact your PayWorks account representative to discuss the end-of-year payroll checklist at your convenience. The earlier you start, the smoother the transition will be into the new year.