Payroll Year End Deadlines & Checklist

2026 W-2s will be mailed directly to your employees, not to you. Ask employees to check their address at myhrstuff.com or in the isolved People Cloud app, or run the "Employee Mailing Labels" report in isolved (Reporting > Reporting Hub). Verify names, Social Security numbers and dates of birth too. The IRS can penalize each W-2 filed with a missing or incorrect Social Security number or name ($60 to $340 per form for 2026 filings, amounts may increase).

Confirm we have your correct Federal & State Tax ID numbers, full legal business name and mailing address so we can file your taxes accurately.

A CP136 notice means your tax payment frequency is changing. Send it to payroll@papertrails.com as soon as you receive it so we can adjust. If we don't receive it, payments will be late and you will be liable for any IRS penalty or interest.

All W-2 adjustments must reach Paper Trails before Friday, December 11. They are often non cash items, and include:

• S corporation shareholder health insurance premiums and automobile or mileage reimbursements
• Group term life paid on behalf of employees over $50,000
• Third party sick pay (short or long term disability paid by your insurer). You report the taxes, so send us your insurer's quarterly statements
• Personal use of a company vehicle
• Non cash payments like gift cards, gym memberships, employee gifts or other fringe benefits

Please check with your accountant to ensure you’re reporting accurate numbers. Questions? payroll@papertrails.com. Adjustments after December 11 require amended returns at $175/hour.

Paid employees by manual check outside of payroll? We will record them on payroll so all wages are properly reported. Forward them to payroll@papertrails.com before December 11.

In order to accommodate the high volume and special processing requests, end-of-year bonuses are due a minimum of 5 business days prior to the bonus date. Example: Friday bonuses need to be submitted no later than Monday. Bonus runs are processed as separate payrolls after we meet all regularly scheduled payroll deadlines. Any bonus run that results in a total tax liability over $100,000 or a direct deposit to a single person greater than $100,000 will need to be funded via wire. We will contact you as soon as we know if this will happen to coordinate wire payment.

If you’d like to process a bonus payroll run, please email your payroll processor at to request a Bonus Spreadsheet and instructions on how to submit our Bonus Payroll Request Questionnaire.

All W-2 adjustments must reach Paper Trails before Friday, December 11. They are often non cash items, and include:

• S corporation shareholder health insurance premiums and automobile or mileage reimbursements
• Group term life paid on behalf of employees over $50,000
• Third party sick pay (short or long term disability paid by your insurer). You report the taxes, so send us your insurer's quarterly statements
• Personal use of a company vehicle
• Non cash payments like gift cards, gym memberships, employee gifts or other fringe benefits

Please check with your accountant to ensure you’re reporting accurate numbers. Questions? payroll@papertrails.com. Adjustments after December 11 require amended returns at $175/hour.

Every December, each state issues updated unemployment rates. If you have employees outside Maine, email the notices to your payroll processor as soon as you receive them so your first payrolls of the year are correct. Missing rates can mean additional tax, penalties and interest that you will be liable for.

Paper Trails now receives Maine rates automatically, so we do not need Maine notices.

2027 has 53 Fridays, but the holiday changes how that plays out. Friday, January 1 is a bank holiday, so Friday pay dates roll back to Thursday, December 31, 2026. Weekly Friday payers will have 53 pay dates in 2026 (all 52 Fridays plus December 31) and only 52 in 2027 (January 8 through December 31). The same applies to biweekly Friday payrolls if January 1 is one of your pay dates. Biweekly cycles that land on December 25 and January 8 are not affected.

If you pay exempt (salaried) employees a fixed amount each pay period, your 2026 salaries may total one extra paycheck unless you adjust the final 2026 payroll, and your 2027 per period amount should be based on 52 pay dates. Because wages count in the year they are paid, the extra pay date also shows up in 2026 year end wages and in per paycheck deductions like retirement and benefits. To make other arrangements for the January 1 pay date, talk with your payroll processor.

Review carefully: employee names, addresses and Social Security numbers, plus final benefit deductions, PTO payouts and fringe benefits. Adjustments or payrolls submitted after 12/31 require amendments at $175/hour.

On January 1, Maine's minimum wage rises with the cost of living to $15.70. Tipped minimum wage will be $7.85. The minimum weekly salary for exempt (salaried) employees will be $905.79. Changes take effect with the first pay date in January, regardless of pay period.

Employees in Portland, Rockland or other cities and states? Track the minimum wage in each place an employee works.

Review carefully: pay rate changes (including minimum wage updates), deduction and benefit changes, and PTO carryovers and balances. As my high school geometry teacher used to preach, "Proper Preparation Prevents Poor Performance!"

Paper Trails no longer prepares nonpayroll 1099s, but our friends at Mainely Bookkeepers have taken over this service. Beginning in 2026, the threshold for issuing a 1099 to a contractor is $2,000 annually. Submit your information by January 22 to Kaitie Bubier at kaitie@mainelybookkeepers.com.