Payroll year-end checklist for 2026: US and Canada

For every payroll

Year-end slips are only a total of the paychecks you already ran. If a slip is wrong in February, the cause is almost always something that could have been fixed in December. Start here, in either country:

1. Check each employee's record: legal name, address, and Social Security number or SIN, exactly as on their card. A mismatch is the most common reason a slip is rejected.
2. Know which pay date counts. Wages belong to the year they are paid, not the year they are earned. A pay period ending December 26 and paid January 2, 2027 is a 2027 paycheck. Decide your last 2026 pay date now.
3. Run bonuses, commissions and expense reimbursements you intend for 2026 on or before that date.
4. Record anything paid outside payroll: a manual cheque, a final pay, a correction. Every one must be in the payroll records or the slips will not match.
5. Reconcile payroll liabilities. The payroll liability accounts on December 31 should equal what is due for the last period, and nothing older.
6. Ask about taxable benefits. Personal use of a company vehicle, gift cards and some other perks are taxable pay and belong on the slip. Talk to your accountant about anything you are unsure of.

United States

• Reconcile the four 941s to the W-2s. Wages, federal withholding, and Social Security and Medicare wages and tax for Q1 to Q4 should add up to the W-3 totals. Fix differences before you file, not after the IRS writes.
• Check the Social Security limit. For 2026, Social Security tax stops at $184,500 of wages (maximum $11,439 each for employee and employer). Medicare has no limit, and Additional Medicare of 0.9% is withheld on wages over $200,000.
• Track tips and overtime. The 2026 W-2 adds box 12 codes for cash tips (TP) and qualified overtime (TT). See what changed in US payroll for 2026.
• FUTA. If the year's FUTA liability is more than $500, deposit the fourth-quarter amount by the 940 due date. The Department of Labor publishes the 2026 list of credit-reduction states in November.
• Contractors are separate. 1099-NEC is for non-employees paid $2,000 or more in 2026. See handling 1099 vendors from W-9 to filing.
• W-4 exemptions expire. Employees who claimed exemption from withholding for 2026 must give you a new W-4 by Tuesday, February 16, 2027 (February 15 is Presidents' Day).
• Register to e-file now. If you file 10 or more information returns in total, they must be electronic: W-2s through SSA Business Services Online, 1099s through IRS IRIS or a service.

For 2027 the Social Security wage base rises to $192,300 (SSA, October 2026). Update it before the first 2027 paycheck.

Canada

• Check the maximums. No employee should be over $4,230.45 CPP, $416.00 CPP2 or $1,123.07 EI for 2026 ($895.70 EI in Quebec). Employees who changed employers may hit them early with you; that is correct, but over-deducting with one employer is not.
• CPP exemptions. Employees who turned 18 or 70 in the year, or who elected to stop contributing, have prorated CPP. Check their totals by hand.
• Reconcile remittances to the T4 Summary. The CPP, EI and income tax you remitted on the PD7A during the year should equal the T4 Summary, less any balance still due. Differences lead to a PIER review letter.
• The December remittance for regular remitters is due Friday, January 15, 2027. Check your own schedule in CRA payroll remittance schedules.
• Quebec employees need an RL-1 slip for Revenu Québec, due by the end of February, as well as a T4.
• Departing employees need a Record of Employment. See the ROE guide.

For 2027, the base CPP rate drops to 4.75% each for employee and employer, and EI is set at 1.64% on up to $70,800. The 2027 YMPE has not been published yet. See what changed in Canadian payroll.

In January

File as early as you can. A slip filed in early February leaves time to fix a wrong number before the deadline.

In AcboBooks

AcboBooks computes Forms 941 and 940 and the W-2s from your paychecks and exports the SSA's EFW2 file for electronic W-2 filing; in Canada it gives the PD7A remittance figures, T4 slips as PDFs, the T4 Summary and an ROE worksheet. It tracks CPP, CPP2, EI, QPP and QPIP against the year's maximums.

Be aware of the limits. Its W-2 totals wages, federal withholding, Social Security, Medicare and state withholding, but it does not fill box 12 codes such as the new TT and TP, so add those yourself when you file. It does not produce the Quebec RL-1 slip or an XML file for T4 transmission; the T4 slips are entered through the CRA's Web Forms or another filing method. Payroll for the new year needs the yearly tax table update. The US payroll and Canadian payroll pages list what is included, and it is all part of the one $399.99 purchase.