Year-end payroll checklist for New York employers

Year-end is when small payroll mistakes come due. A misspelled name, a bonus run without the right withholding or a forgotten perk can turn into a corrected W-2, a penalty notice or an awkward conversation with an employee in February. This year-end payroll checklist for New York employers covers what to review now, the federal and state deadlines for early 2027, the two Friday holidays that affect paydays, and the rates that change on January 1.

Work through it in order and most of the January rush becomes a few quick confirmations. One date to circle right away: January 31, 2027 falls on a Sunday, so most of the big filings are due Monday, February 1, 2027.

Your New York year-end payroll checklist: the 2027 filing deadlines

If you deposited all the tax for the quarter or the year on time and in full, the IRS gives you until February 10, 2027 to file Form 941 or Form 940. You can ask the Social Security Administration for one 30-day extension to file W-2s, but it isn’t automatic and doesn’t extend the date for giving W-2s to employees. New York allows no extensions for Form NYS-45.

Contractor reporting also changed for 2026 payments: the threshold for Form 1099-NEC and most Form 1099-MISC boxes is now $2,000, up from $600. Gross proceeds paid to an attorney stay at $600. See our 1099-NEC vs 1099-MISC reference for those thresholds, the due dates and the 10-return e-file rule.

On the state side, there’s no separate annual wage report to file. Since 2019, every Form NYS-45 has included full wage and withholding detail for each employee in Part C, so the fourth-quarter return just needs to be complete and on time.

What’s at stake: every one of these forms carries late-filing penalties, and the deadlines stack up in the same week. How it gets easier: when your payroll provider prepares the W-2s and files the quarterly and annual returns for you, this table becomes a list to confirm rather than a list to do.

Plan paydays around Christmas and New Year’s Day

Both holidays fall on a Friday this year: Christmas Day is Friday, December 25, 2026, and New Year’s Day is Friday, January 1, 2027. The Federal Reserve is closed on both days, so direct deposits don’t settle on those dates.

If Friday is your usual payday, decide now whether you’ll pay on Thursday, December 24 and Thursday, December 31, and tell employees. Then work back from your payroll processing deadline so the last payroll of 2026 and the first of 2027 are submitted in time. Two more Monday bank holidays follow early in the year: Martin Luther King Jr. Day on January 18, 2027 and Washington’s Birthday on February 15, 2027.

What’s at stake: late pay in a holiday week, right when employees are counting on it. How it gets easier: a payroll calendar set before December, with holiday paydays already moved.

Check names, addresses and Social Security numbers

Every W-2 depends on the details in your employee records. Look for name changes, new home addresses and any Social Security number you entered by hand during the year.

What’s at stake: a wrong name or number means a corrected W-2 later and earnings that may not post to the employee’s Social Security record. A W-2 mailed to an old address is a phone call you’ll get in February. How it gets easier: the Social Security Administration’s free Social Security Number Verification Service lets registered employers check names and numbers before W-2s go out.

If you run payroll with PayNortheast, employees can review and update their own information online, so you can ask them to confirm their address before W-2s go out.

What’s new on the 2026 W-2: tips and overtime

The 2026 Form W-2 has new reporting tied to the federal deductions for qualified tips and qualified overtime, which employees can claim on their own returns for 2025 through 2028.

• Box 12, code TP: total cash tips the employee reported to you.
• Box 12, code TT: total qualified overtime compensation. This is only the extra “half” of time-and-a-half that federal overtime law requires, not the full overtime pay.
• Box 14b: the Treasury tipped occupation code for employees who receive tips.

These amounts come from your payroll records, so the time to check them is before the last pay run, not in late January. Only overtime that federal law requires counts. Overtime premiums you pay only because of a state rule or your own policy aren’t qualified overtime. Talk with your tax advisor if you’re unsure which of your overtime hours qualify.

What’s at stake: W-2s that leave out amounts your employees need for their own tax returns. How it gets easier: when tips and overtime are tracked by type during the year, the new boxes fill in from payroll.

Add taxable fringe benefits and S corp owner health insurance

Some of what you gave employees this year counts as wages even though it never ran through a paycheck. Under IRS rules, cash and cash equivalents such as gift cards are always taxable, however small. Personal use of a company vehicle is another common one. Add these to payroll before the last pay run so they land on the right W-2.

If your business is an S corporation and pays health insurance premiums for an owner who holds more than 2% of the shares, those premiums go in box 1 of the owner’s W-2 as wages. They aren’t included in the Social Security and Medicare wage boxes (boxes 3 and 5).

What’s at stake: missing these amounts means W-2s that don’t match what was paid, and corrections after the fact. How it gets easier: enter them once in payroll and they flow onto the W-2 automatically.

Plan year-end bonuses and supplemental withholding

Bonuses are supplemental wages. For federal income tax, the IRS allows a flat 22% withholding rate on supplemental wages paid separately from regular wages, and requires 37% on the portion of an employee’s supplemental wages above $1 million in the year.

New York has its own option. For 2026, if you already withhold New York tax from the employee’s regular wages, you can withhold on a separately paid bonus at the state supplemental rate of 11.70%. For New York City residents, the city supplemental rate is 4.25%. You can also add the bonus to the most recent regular paycheck and figure withholding on the total.

Bonuses and commissions also count as wages for New York Paid Family Leave deductions, so the usual PFL contribution applies to a bonus check, up to the annual cap. Check how your bonus will be taxed before you promise anyone a net amount.

What’s at stake: an employee who expected a bigger check, or under-withholding that surfaces at tax time. How it gets easier: a bonus can be paid in a regular pay run or on its own off-cycle check, with withholding handled either way.

Review PTO policies, sick leave carryover and final pay

Year-end is the natural time to look at your time-off policy. In New York, an employer generally has to pay out earned vacation when someone leaves unless it told employees in writing about the conditions that cause them to forfeit it. If your policy includes a use-it-or-lose-it rule or a carryover limit, make sure it’s in writing and that employees have it.

New York paid sick leave works differently: unused sick leave carries over into the new year. You can limit how much an employee uses in a year to the 40 or 56 hours the law requires for your size, and you don’t have to pay out unused sick leave when someone leaves. Employees can ask for a summary of their sick leave accrued and used, and you have three business days to provide it.

For anyone leaving at year-end, New York Labor Law requires final wages to be paid no later than the regular payday for the pay period in which employment ended.

What’s at stake: wage claims over vacation pay or a late final check. How it gets easier: a clear written policy, and accruals tracked in payroll, so balances are never a guess.

Remind employees about Form W-4 and Form IT-2104

Employees who claimed exemption from federal withholding for 2026 need to give you a new Form W-4 to stay exempt. The usual February 15 deadline moves to February 16, 2027 because February 15 is a federal holiday. Without a new form, the IRS says to withhold as if the employee is single or married filing separately with no other entries.

It’s also a good moment to remind everyone that they can update their federal Form W-4 and New York Form IT-2104 if marriage, a new child, a second job or other changes affect their withholding.

Rates and limits that change on January 1, 2027

Update these before your first 2027 payroll. Where the 2027 figure hasn’t been published yet, we say so.

• Social Security and Medicare: the Social Security tax is 6.2% each for the employer and employee, so the most an employee pays in 2027 is $11,922.60. Medicare stays at 1.45% each with no wage limit.
• Paid Family Leave: the contribution is withheld from employee pay each period until the annual cap. The coverage itself comes from your insurance carrier, and payroll handles the deduction.
• Unemployment insurance: the New York wage base adjusts every January 1 to 18% of the state average annual wage, and the Department of Labor posts the new figure by December 31. Until then, use $17,600 only for 2026 wages. Your 2027 contribution rate comes on a separate notice from the Department of Labor.
• Disability benefits (DBL): the employee share is set by law at one-half of 1% of wages, up to 60 cents a week. Like PFL, the coverage comes from your insurance carrier.
• MCTMT: if you have more than $312,500 of payroll expense in a quarter for employees in New York City or Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess or Westchester counties, you owe the Metropolitan Commuter Transportation Mobility Tax for that quarter and file Form MTA-305. Rates are tiered, with a top rate of 0.895% in New York City and 0.635% in the other counties.

Minimum wage in 2027. The general rates don’t change: $17.00 an hour in New York City, Long Island and Westchester, and $16.00 in the rest of the state. Home care aides move to $20.00 and $19.00. For tipped workers in hospitality, the only industry that can take a tip credit:

• Food service workers: a cash wage of $11.35 with a $5.65 tip credit in New York City, Long Island and Westchester, and $10.70 with a $5.30 tip credit in the rest of the state.
• Service employees: a cash wage of $14.15 with a $2.85 tip credit in New York City, Long Island and Westchester, and $13.30 with a $2.70 tip credit in the rest of the state.

For federal unemployment, check Schedule A of Form 940 if you paid wages in a state on the Labor Department’s 2026 credit reduction list, which becomes final after November 10. Current Social Security, Medicare and FUTA figures, including that list, are on our payroll tax rates page.

Keep the records

The IRS asks employers to keep all employment tax records for at least four years. New York requires payroll records to be kept for six years, including hours, pay rates, deductions and sick leave accrued and used. Save your filed returns, W-2s and deposit confirmations together so they’re easy to find if a notice arrives.

Close out 2026 with confidence

Run through this list in November and December and January stops being a scramble. Every business is a little different, so if you’re unsure how a rule applies to yours, talk with your tax advisor.

If you’ve been meaning to change how you run payroll, the turn of the year is a natural time to do it. PayNortheast offers full-service payroll that’s more affordable, with free account setup when you switch, and we move your payroll data for you.

Sources: IRS, General Instructions for Forms W-2 and W-3; IRS, Instructions for Forms 1099-MISC and 1099-NEC; IRS, Publication 15 (Circular E); IRS, Publication 15-B; IRS, S corporation compensation and medical insurance issues; IRS, Topic 753, Form W-4; Social Security Administration, Contribution and benefit base; Social Security Administration, SSNVS; Federal Reserve, Holiday schedules; U.S. Department of Labor, FUTA credit reductions; NYS Department of Taxation and Finance, Withholding tax due dates; NYS Department of Taxation and Finance, Publication NYS-50; NYS Department of Taxation and Finance, NYS-50-T-NYS; NYS Department of Taxation and Finance, NYS-50-T-NYC; NYS Department of Taxation and Finance, MCTMT for employers; NYS Department of Labor, Minimum Wage; NYS Department of Labor, NYS-45 quarterly reporting; NYS Department of Labor, Wages and Hours FAQ; NYS Department of Financial Services, 2027 Paid Family Leave rate decision; New York Paid Family Leave, Cost; NYS Workers’ Compensation Board, Disability and Paid Family Leave; New York State, Paid Sick Leave; NY Labor Law Section 196-b; NY Labor Law Section 191