📝 Overview
This article covers everything you need to know to close out the payroll year accurately and on time. You'll find a summary of the year-end communications you can expect from DaySmart Payroll, a month-by-month checklist of key tasks, and answers to the most common year-end questions.
📆 Year-End Communications: What to Expect
During the year-end period, DaySmart Payroll sends a series of proactive communications to help you stay on track with key tasks and deadlines. The table below outlines the timing, channel, and focus of each communication.
Timing | Channel | What to Expect | What You Should Do |
Early November (Weeks 1–2) | Email + in-app banner | "Get Ready for Year End": checklist availability, importance of data cleanup, and state/federal updates | Start verifying your company and worker information before the holiday season |
Mid November (Weeks 3–4) | In-app reminder + short email | Data Verification and Setup Completion by November 28: prompts to upload new unemployment rate notices, verify EINs, and confirm addresses | Complete data verification and any outstanding setup tasks by November 28 |
Early December (Week 1) | Email + in-app message | "Finalize Data and Prepare for Forms": key cutoff dates, including December 15 for data updates and December 31 for final payrolls | Plan your final payrolls and bonus runs around funding cutoffs and bank holidays |
Mid December (Weeks 2–3) | In-app checklist + email reminder | Holiday Funding and Fringe Benefits: deadlines for bonuses and fringe benefits, with a reminder about the December 25 bank closure | Submit bonus payrolls early and record any taxable fringe benefits before year end |
Late December (Week 4) | In-app alert | Final Payroll Deadline: reminder to run your last payroll before December 31 | Run any remaining payrolls with a prior-year check date before December 31 |
Early January (Week 1) | Email + in-app message | "File, Distribute and Close": Q4 close, tax payment due dates (January 7 and 15), and W-2/1099 preparation | Close Q4 payrolls, confirm tax payments are on schedule, and prepare for form distribution |
Late January (Weeks 3–4) | Email + in-app notification | "Forms to be distributed by January 31": worker delivery deadline and correction window | Confirm W-2s and 1099s have been distributed and address any errors promptly |
💡 Act on each message as it arrives. Year-end tasks build on each other, and delays in early steps can create problems later. Watch for in-app alerts about items specific to your account, such as an unemployment rate that has not yet been uploaded.
📋Year-End Payroll Checklist
Use the checklist below to stay on top of key tasks across November, December, and January. Complete each section before moving to the next to avoid last-minute corrections and filing delays.
🍂 November: Get Ready for Year End
Goal: Begin data cleanup and prepare for state and federal changes before holidays disrupt schedules.
Verify company information: confirm legal name, address, EIN, and state account numbers
Verify worker data: check legal names, addresses, SSNs/ITINs, and email addresses
Upload new SUI tax rate notices as received
Review your tax deposit frequency and update it in your payroll account if it has changed
Complete any onboarding or new account setup by November 28 to ensure records flow into year-end reporting
Review fringe benefits (company cars, Group Term Life Insurance, S-Corp 2% shareholder health coverage) and note those that need reporting
Start preparing bonus payrolls if applicable: confirm funding dates and cutoffs
Check FUTA credit reduction states and budget for any higher FUTA tax liability, if applicable
🎁 December: Finalize Data & Prepare for Forms
Goal: Lock in accuracy before quarter and year close.
Complete all worker and company updates by December 15
Run final payrolls before December 31: verify earnings, deductions, and PTO balances
Stop retirement plan catch-up contributions, if applicable
Record any taxable fringe benefits or third-party sick pay before year end
Reconcile payroll totals against quarterly filings (941, state)
Plan around the December 25 bank closure to avoid funding delays
Confirm all worker addresses are correct for W-2/1099 delivery
Communicate upcoming timelines to staff: final payroll, holiday pay policies, etc.
⛄ January: File, Distribute & Close
Goal: Meet all compliance deadlines and transition to the new year. Submit corrections and backdated adjustments by January 2; after that date, amendments are required.
Close Q4 payrolls by January 4 and verify all taxes and wages are correct
Confirm semi-weekly and monthly tax payments (due January 7 and January 15)
Download and review company tax packages between January 26 and 28
Ensure all W-2s and 1099s were distributed to workers
💡 DaySmart Payroll handles W-2 and 1099 distribution, but confirm it was completed.
Provide Earned Income Tax Credit (EITC) notices to workers, if required
Plan for state quarterly and annual SUI filings (due January 26 through February 2)
Review state unemployment insurance changes for the new year and update rates in the system
Archive prior year payroll reports and W-2/1099 copies for recordkeeping
⚠️ Proactive steps worth considering: Schedule a year-end review meeting to cover tax rate changes, benefit updates, and PTO rollover. Establish a W-2/1099 communication plan for workers. Set reminders in mid-January for any reissued or corrected forms, and schedule a Q1 Payroll Readiness Review to cover new rates, benefit deductions, and new hire compliance.
❓ Frequently Asked Questions (FAQs)
Find answers to common questions or additional details that may not be covered in the main instructions.
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What year-end communications will I receive and when?
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DaySmart Payroll sends communications from early November through late January. Each message corresponds to a specific deadline or action: data verification in November, payroll finalization and holiday funding in December, and Q4 close and form distribution in January. Refer to the communication schedule table above for full details.
What should I do if I receive an in-app alert about incomplete data?
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Address it as soon as possible. Common alerts include a missing unemployment rate notice, unverified worker addresses, or incomplete EIN information. Unresolved data issues can affect your year-end filings and tax form accuracy. If you are unsure what is needed, contact DaySmart Support.
What happens if I miss the November 28 onboarding or data deadline?
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If onboarding is not complete by November 28, processing payroll for the current tax year may not be possible. For data changes, anything submitted after that date may not be applied to current year filings. Your return will still be filed, but corrections may require an amendment after the filing deadline. Additional fees may apply. Contact DaySmart Support to check your account status.
What if I submitted changes after the December 31 cutoff date?
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If changes, such as state account numbers or SSNs, are submitted after the cutoff date, they cannot be applied to current filings. Your return will still be filed on time, but corrections will need to be made through an amendment after the filing deadline. Additional fees may apply.
What is the last day to run a payroll with a prior-year check date?
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The last date to run a payroll with a prior-year check date is January 2 of the new year. Any payroll submitted after that date will carry the new year's date.
Do I need to do anything about fringe benefits before year end?
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Yes. Taxable fringe benefits, such as personal use of a company vehicle, Group Term Life Insurance over $50,000, and S-Corp 2% shareholder health coverage, must be recorded before December 31 to be included in the correct tax year. If you are unsure whether a benefit is taxable, consult your accountant or tax advisor.
When will W-2s and 1099s be available?
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DaySmart Payroll uploads company tax packages, including W-2s and 1099s, during the last week of January. Paper copies are also mailed to workers by January 31.
How can I make sure workers receive their W-2s and 1099s?
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To ensure accurate delivery, confirm the following before year end:
All worker addresses and SSNs are accurate and up to date
Digital copies of W-2s and 1099s are available in your Documents center once uploaded
Paper copies are mailed to workers at the address on file
What if there is an error on a worker's W-2 or 1099?
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Contact DaySmart Support. An amended form can be created for the worker, but additional fees may apply.
What if I receive a notice updating my tax rate or deposit frequency?
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If you receive a notice that your state unemployment tax rate or state withholding deposit frequency is changing for the upcoming year, you can update it directly in your payroll account with the new effective date.
What are W-3 and 1096 forms, and do I need to file them?
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Form W-3 and Form 1096 are cover sheet forms submitted alongside paper copies of W-2 and 1099 filings. DaySmart Payroll files these electronically on your behalf. Digital copies are included in the employer tax package available in your Documents center, but you do not need to file them separately.
What is FUTA credit reduction and could it affect my business?
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FUTA (Federal Unemployment Tax Act) provides funding for unemployment compensation. The standard FUTA tax rate is 6% on the first $7,000 paid to each employee per year. Employers who pay state unemployment taxes on time and in full typically receive a credit of up to 5.4%, effectively reducing the rate to 0.6%.
A FUTA credit reduction occurs when a state has borrowed federal unemployment funds and has not repaid them within the allowed timeframe. Employers in those states lose a portion of their credit, resulting in a higher effective FUTA rate. Check the IRS FUTA credit reduction list each fall to determine whether your state is affected. DaySmart Payroll will communicate when any resulting tax debits are scheduled to be created.
Is Minnesota Paid Family and Medical Leave (PFML) handled through payroll?
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Yes. Minnesota Paid Family and Medical Leave is supported through DaySmart Payroll. If you have employees in Minnesota, this tax will be calculated and withheld through your regular payroll processing.
How can tips and overtime be identified for workers who may qualify for a deduction under the One, Big, Beautiful Bill?
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Under the One, Big, Beautiful Bill, some workers may be eligible to claim a deduction on their personal tax return for qualified tips and overtime. Here is how workers can identify the relevant amounts:
For tipped wages: Workers can use the amount reported in Box 7 of Form W-2 to identify their qualified tip income.
For overtime pay: Workers can use their final paystub(s) to calculate their overtime premium pay. For regular overtime, divide the total overtime pay by 3. For double overtime, divide the total overtime pay by 2.