The Year-End Payroll Mistakes That Turn Into a W-2c

Most year-end payroll problems aren’t caused by anything complicated. They’re caused by timing. A small data issue that would take five minutes to fix in October turns into a W-2c, a corrected filing with the IRS and the Social Security Administration, once it’s discovered in January instead.

Here are the mistakes that show up most often, and why they’re easier to prevent than to fix. For the full step-by-step timeline, see our Year-End Payroll Checklist, part of the broader Year-End Payroll and Tax Season Guide.

Running bonuses through regular payroll instead of as supplemental wages

A year-end bonus isn’t a bigger version of a regular paycheck. The IRS treats it as a supplemental wage, generally withheld at a flat 22% federally (37% on the portion of an employee’s cumulative supplemental wages over $1 million in a calendar year), separate from whatever an employee’s W-4 says. Run it through the standard calculation instead, and withholding usually comes in too low, which the employee finds out about in April, not from you.

Letting benefits deduction mismatches ride until the final run

A plan change from mid-year that never made it into payroll is a quick correction in October. Caught during the pre-close audit in December, the same mismatch means adjusting deductions retroactively across several pay periods, on a deadline, instead of once.

Assuming a departed employee’s address is still current

Returned W-2s are disproportionately common among employees who’ve already left. They have no ongoing reason to tell HR about a move after their last paycheck, which means the address on file is often stale by the time year-end mailing happens.

Tracking only the federal correction deadline

Not every state runs W-2 correction deadlines on the same schedule as the IRS. A correction filed on time federally can still miss a state’s own earlier cutoff if nobody checked for it separately.

Skipping a documented cutoff for last-minute changes

Without a communicated deadline for off-cycle changes, late requests get handled ad hoc by whoever’s available. That’s exactly the kind of condition a small error slips through.

None of these require new software or a bigger team to avoid, just catching them earlier than the last pay run. A connected payroll platform surfaces most of these automatically instead of relying on someone remembering to check. See the full Year-End Payroll Checklist for the complete week-by-week list.

Frequently Asked Questions

This article is for general informational purposes only and is not legal, tax, or accounting advice. Requirements vary by business and location. Consult a qualified professional for guidance specific to your situation.

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