Year-End Payroll Checklist 2027: W-2, 1099 and ACA Deadlines

The first payroll deadline of 2027 is Monday, February 1. January 31 falls on a Sunday, so 2026 Forms W-2 to employees and to the Social Security Administration, 1099-NEC to contractors and the IRS, and the fourth-quarter Form 941 all move to the next business day. Three things changed for this cycle: the 1099 reporting threshold rose from $600 to $2,000 for payments made in 2026, the W-2 gained new Box 12 codes for overtime premium pay and tips under the 2025 tax law, and the Social Security wage base rises to $192,300 on January 1, 2027.

This checklist is written for the person who runs payroll at a small or mid-sized US employer and has to get the year closed without a penalty notice. Every date is taken from the IRS instructions for the form in question, every 2027 figure carries the date it was announced, and the items the agencies have not yet published, the 401(k) limits, the mileage rate, the final ACA dates, are marked pending rather than guessed.

Filing deadlines for 2026 wages

Dates below are from the IRS General Instructions for Forms W-2 and W-3 (2026), the Instructions for Forms 1099-MISC and 1099-NEC (revised December 2026), and the IRS employment tax due dates page. A form mailed and properly addressed on or before the due date counts as timely.

There is no automatic extension for W-2s. Form 8809 gives one 30-day extension to file with the SSA, granted, in the IRS's words, only in limited cases for extraordinary circumstances or catastrophe; Form 15397 covers an extension to furnish copies to employees on the same basis. Plan on February 1.

What changed on the forms this year

• The 1099 threshold is $2,000. For payments made after December 31, 2025, Forms 1099-NEC and 1099-MISC are required at $2,000 rather than $600, indexed for inflation from 2027. The exceptions stay: royalties at $10 and gross proceeds paid to attorneys at $600. Collect W-9s now from every vendor who might cross the line; the threshold change does not remove the backup withholding duty when a taxpayer identification number is missing.
• New W-2 Box 12 codes. The 2026 W-2 adds code TT for the qualified overtime premium, code TP for cash tips reported to the employer, and a Box 14b for the Treasury tipped-occupation code, to support the deductions for overtime and tips created by the 2025 reconciliation law. A further code TA covers employer contributions to the new children's savings accounts. The overtime figure is the premium portion only, the half in time and a half, not the full overtime wage, and your payroll system needs to separate it from January 1 onward if it has not already.
• ACA furnishing on request. Under the Paperwork Burden Reduction Act and IRS Notice 2025-15, an applicable large employer may post a clear notice on its website, with an email address, physical address and phone number, and furnish a 1095-C only to employees who ask, within 30 days of the request. The notice must stay up through October 15. The option does not apply to full-time employees enrolled in self-insured coverage and does not change the duty to file with the IRS. The draft 2026-year instructions set the notice deadline at March 2, 2027.
• E-filing at ten returns. Since 2024, an employer that files ten or more information returns of any type combined must file them all electronically; corrected returns are counted separately.

2027 payroll figures announced so far

State minimum wages and state exempt salary thresholds change on January 1 in more than twenty states. Our minimum wage by state 2027 and exempt salary thresholds by state 2027 pages carry the figures, and the January 1, 2027 roundup covers the paid leave, pay transparency and AI rules that start the same day.

Penalties for late or wrong forms

For W-2s due after December 31, 2026, the IRS instructions set the per-form penalty under sections 6721 and 6722 at $60 if corrected within 30 days, $130 if corrected by August 1, and $340 after that or if never filed, with intentional disregard at $690 per form and no cap. The annual caps are $698,500, $2,095,500 and $4,191,500, or $244,500, $698,500 and $1,397,000 for a small business with average gross receipts of $5 million or less. The same three tiers apply separately to the employee copy and the SSA copy, so one missed W-2 can cost two penalties. The 1099 instructions for the 2027 season had not been updated when this page was written; the prior season's tiers were $60, $130, $340 and $680, so budget on the W-2 figures. Two safe harbors help: errors of $100 or less in a dollar amount ($25 in withholding) need no correction, and a small number of returns corrected by August 1 (the greater of ten or half a percent) are forgiven.

A figure that circulates on payroll vendors' sites, that 40% of small businesses are penalized for payroll errors each year, is attributed to the IRS without a source and we could not find one. The documented cost figure is EY's December 2022 survey of 508 US companies with 250 to 10,000 employees, commissioned by Paycom, which put the average payroll error at $291 and found one payroll in five contained errors. Our payroll error statistics page covers what that survey does and does not show.

The year-end checklist, with the reason for each step

1. Verify every employee's name, Social Security number and address against the Social Security card before the last payroll of December. A name and number that do not match produce a W-2 the SSA cannot post, a W-2c to file, and exposure to the per-form penalty. The SSA's Social Security Number Verification Service is free to registered employers.
2. Reconcile the four quarterly 941s to the W-3 totals for wages, federal withholding, Social Security and Medicare before anything is filed. A mismatch between the 941s and the W-2s is the most common trigger for an IRS or SSA notice, and it is far cheaper to find in January than to explain in July.
3. Separate the overtime premium and reported tips in your payroll system so Box 12 codes TT and TP can be populated for 2026. If the system did not split them during the year, the premium portion has to be reconstructed from timesheets; our overtime calculator shows the arithmetic.
4. Report taxable fringe benefits on the last payroll. Group-term life insurance over $50,000 goes in Boxes 1, 3 and 5 and Box 12 code C; personal use of a company vehicle is valued under the cents-per-mile or lease-value rules in Publication 15-B; commuting in an employer vehicle more than once a month is not de minimis. Third-party sick pay paid by an insurer is reported in Box 12 code J with the Box 13 box checked.
5. Pay or defer December bonuses deliberately. A bonus is taxable in the year the employee can draw it, not the year it was earned. Decide before the final December pay date which year each bonus belongs to.
6. Collect W-9s and count 1099 payments against the $2,000 threshold, with the $10 royalty and $600 attorney exceptions. A missing taxpayer identification number means 24% backup withholding on further payments.
7. Decide how you will furnish 1095-Cs. Either mail by the expected March 2 date or post the on-request notice by March 2 and keep it up through October 15, remembering that self-insured enrollees must still receive a copy.
8. Check final paychecks and PTO payouts for anyone who left in December against your state's rule. Federal law sets no deadline; many states do, and several require accrued vacation to be paid. Our final paycheck laws by state and PTO payout by state pages have the tables.
9. Load the January 1 rate changes before the first 2027 payroll: the $192,300 wage base, state unemployment wage bases, state and local minimum wages, state exempt salary thresholds, and any new paid leave contribution (Maryland's family and medical leave contributions start January 1, 2027 at 0.9% of wages; Massachusetts and Colorado adjust their splits and rates on the same day).
10. Review exempt employees against the new thresholds. An exempt employee in California must earn $72,384 from January 1, 2027, and in Washington $92,196 at employers with 51 or more staff. Anyone below the line is overtime-eligible from the first week of January, and timekeeping for them has to start then, not when payroll notices.
11. Prepare the 2027 Form W-4. The draft released July 7, 2026 keeps the current structure. Existing employees need not refile; employees who claimed exempt in 2026 must file a new W-4 by February 16, 2027 to keep the exemption.
12. Reverify work authorization that expires using Supplement B of Form I-9, and purge I-9s past the retention period: the later of three years after hire or one year after separation.
13. Count full-time employees and equivalents for every month of 2026 to confirm applicable-large-employer status (50 or more) and to complete the 1094-C, and test 2027 plan-year contributions against the 10.22% affordability figure.
14. Check the FUTA credit reduction list published by the Department of Labor after November 10, 2026 and complete Schedule A of Form 940 if you paid wages in a listed state. California was on the potential list; the US Virgin Islands repaid its loan during 2026.
15. Reconcile time records to payroll for non-exempt staff before the records roll over. The time record is the defense in any wage claim, and the rounding rules and break records are what an auditor asks for first.
16. Archive the year in a format you can open in four years: payroll registers, 941s, W-2 and W-3 copies, 1099s, time cards and the I-9 file, per the retention periods below.

State deadlines that differ

Most states that require W-2 and 1099 filing follow the federal February 1 date. The exceptions reported by payroll filing vendors for the 2027 season include Mississippi and Idaho at March 1, Missouri at March 1 for employers filing fewer than 250 W-2s, Louisiana at March 1 for 1099-NECs without withholding, and Iowa in mid-February. These dates come from vendor tables rather than state agency pages, and two of them (Iowa and Oregon) differ between sources, so check your state revenue department's page in January before relying on any date later than February 1. Filing early to the federal date satisfies every state.

What to keep and for how long

Key takeaways

• W-2s to employees and the SSA, 1099-NECs, and the fourth-quarter 941 are all due Monday, February 1, 2027, because January 31 is a Sunday. There is no automatic W-2 extension.
• The 1099 threshold is $2,000 for payments made in 2026, with the $10 royalty and $600 attorney exceptions unchanged.
• The 2026 W-2 has new Box 12 codes TT (overtime premium) and TP (reported cash tips) plus Box 14b; separate the overtime premium in payroll now if you have not.
• The Social Security wage base is $192,300 for 2027, announced October 14, 2026; HSA limits are $4,500 and $9,000; the ACA affordability figure is 10.22%; 401(k) limits and the mileage rate were still pending on October 28, 2026.
• W-2 penalties for the 2027 season are $60, $130 and $340 per form by correction date, $690 for intentional disregard, applied separately to the employee and SSA copies.
• Applicable large employers can post an on-request notice instead of mailing 1095-Cs, except to self-insured enrollees; the IRS filing duty is unchanged.
• Keep payroll records three years, time cards two, employment tax records four, and I-9s three years from hire or one from separation.