Keep Payroll from getting tripped up this year-end with this 11-step checklist

Your Payroll pros may be distracted this year-end because IRS still hasn’t committed to dropping the mandatory threshold for e-filing information returns in 2023, there’s a new e-filing option for 1099s being rolled out in January, and Forms W-2, 1099 and 1095 will be subject to increased scrutiny by the Service.

However, the fact is your team can’t afford to make mistakes with year-end planning and reporting that end up costing you money. So to set them up for success, here are some reasonable goals for getting ready for tax season right now.

Get these done by year-end

Step one: Review the holiday processing schedule and remind managers of the dates time sheets must be submitted to Payroll.

Step two: Find out when your software provider is publishing tax updates for 2023.

Step three: Prepare to repay the second half of any Social Security taxes your company deferred in 2020 as part of COVID-19 relief. The deadline is December 31.

Step four: Check your Form 941 records from the first three quarters against the totals on all three forms. Identify any over- or under-reporting of income, wages or tax credits. Then file Form 941-X to correct any errors.

Step five: Register with the Social Security Administration’s (SSA) Business Services Online (BSO) portal here. Effective September 19, 2022 when taxpayers register to use BSO, or for any new BSO service – including the submission of W-2 and W-2C reports – SSA will mail out an activation code to complete the process. Doing this now will allow time for the activation code to arrive in the mail.

Step six: Confirm all employee addresses and Social Security Numbers. If necessary, use the SSA’s Social Security Number Verification Service.

Step seven: Check the deduction codes for any employees that making charitable donations through payroll deductions. You have the option to report those amounts in Box 14 of their W-2s.

Step eight: Ask other departments (e.g., Accounting, A/P, A/R, Benefits, HR) if they’ll need year-end reports from Payroll.

Step nine: Review authorization letters and corporate officers’ facsimile signatures for Forms 941, 940 and 945.

Step 10: Identify any new third-party administrators (e.g., 401(k) plan, payers of sick pay, etc.) that you’ll be working with.

Step 11: If you use the special accounting rule for non-cash fringe benefits, establish a cutoff date