2024 Payroll Year-End To Dos

It's that time of the year to wrap up 2024 payroll tasks. Here are a few reminders to help you close out your payroll for the year.

Late November/Early December:

• Remind employees that if there has been a change in their filing status (e.g., due to marriage, divorce, or dependents), they may want to file a new W-4 and state tax form for 2025.

• Compare the previous W-2 with the gross wage report and look for justifications for increases or changes in wages (e.g., approved salary increases).

• Confirm that employee name, address, date of birth, and Social Security numbers are correct.

• Verify all employees are taxed in their correct state.

  
  

Before your last payroll of 2024:

• For tax purposes, checks or electronic payments of wages paid in 2025 are generally 2025 wages, even if earned in 2024.

• Check all Social Security tax withheld. If any employee exceeded the 2024 limit, make an adjustment or refund before making your final tax-year 2024 deposit.

• Verify that all special wage payments and adjustments are correctly posted to 2024 earnings before processing 2024 W-2s. These may include:

  • Non-qualified relocation expense reimbursement

  • Group term life insurance in excess of $50,000

  • Third-party sick pay if the employer has responsibility

  • Manual or voided paychecks not in the payroll system

  • Personal use of company vehicles, parking, and/or company-provided transportation

  • Employer-paid childcare

  • Company-paid educational assistance

  • Bonuses

  • Non-cash payments

    
    

After your last payroll of 2024, but before the first payroll of 2025:

• Process W-4s submitted for 2025.

• Review discrepancies such as missing addresses and missing Social Security numbers.

• Check for excess contributions to qualified plans, including 401(k), 403(b), especially for highly compensated employees.

• Notify employees about the 2025 Employee Contribution Limit into their 401(k) and 403(b) plans: $23,500 ($500 increase from 2024 limit).

  • If the employee is aged 50 and older, they’re eligible for an additional $7,500 in catch-up contributions, raising the employee contribution limit to $31,000.

  • Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in these plans. For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500.

• Check accumulators – Make sure the year-to-date numbers are zeroed out.

• Review applicable state/local minimum wage changes.

• Schedule any special bonus payrolls.

• Verify that the new year month-end close-out dates are accurate.

• Confirm that for the new year, the schedule of pay dates, period ending dates, and quarter closing dates are as intended and do not fall on holidays or weekends. If the end of the year coincides with benefits policies resetting, inform employees about unused benefits.

• Vacation, sick days, or personal leave time: Annotate any remaining paid time off and communicate it to the employees so that they can schedule and coordinate leave time accordingly.

• Flexible spending accounts (FSAs) and health reimbursement accounts (HRAs) for medical costs and dependent care: Usually, FSAs have a use-it-or-lose-it feature. Advise employees about the terms of your plans and remind them in advance.

  
  

Record All Processed Paychecks

While you won’t be able to finalize your annual payroll and tax numbers until after the final pay period, you can get a jump start on recording and verifying everything that has already been processed. Review previous pay periods to ensure that all amounts are logged accurately by verifying the following:

• Employee wage amounts

• Benefits deductions

• Child support or other miscellaneous deductions

• Disability or other benefits payments

• Special tax exemptions that may have occurred throughout the calendar year

  
  

  For tax purposes, checks or electronic payments of wages paid in 2025 are generally 2025 wages, even if earned in 2024.

  
  

If your organization deferred the employer portion of Social Security taxes during any recent relief measures, you’ll also need to verify the deferred amounts, which can affect the amount of taxes due in 2025.

If you have any questions, please do not hesitate to contact Kiwi Partners' HR Services team.