Year-End Payroll Guide

Employer Resources

Fringe Benefits

A fringe benefit is a form of compensation for the performance of services. Any fringe benefit your company provides is taxable and must be included in the employee's pay unless the law specifically excludes it. Use this chart to understand the types of fringe benefits and where they are reported on your W-2s.

Earning

Description

W-2 Reporting

Automobile Fringe The taxable amount of an employee's personal use of a company car. Box 1 Box 3 and 5 Box 16, varies Box 18, varies Box/Code: 14/AUTO
Commodity Wages The value of a commodity (such as grain, or livestock), that is paid to an employee for farm work. Box 1 Box 16 Box/Code: 14/C WAGE
Dependent ER HC Fed Txbl The amount that the employer contributes to the healthcare plan of an employee's over-age dependent.
The amount is subject to federal taxes only.
Box 1 Box 3 and 5
Dependent ER HC St/Loc Txbl The amount that the employer contributes to the healthcare plan of an employee's over-age dependent.
The amount is subject to state and local taxes only. Taxability rules for over-age dependents vary by state.
Box 16, varies Box 18, varies
Dependent ER HC Txbl All The amount that the employer contributes to the healthcare plan of an employee's over-age dependent.
The amount is subject to federal, state, and local taxes. Taxability rules for over-age dependents vary by state
Box 1 Box 3 and 5 Box 16, varies Box 18, varies
DP Benefit The amount the employer contributes to an employee's Domestic Partner Benefits plan. The amount is reported as federal taxable wages on the employee's W 2. State and local taxability varies. Box 1 Box 3 and 5 Box 16 Box 18
ER-Sponsored Dental The cost of employer-sponsored dental coverage, which should include both the portion paid by the employer and the portion paid by the employee. Not taxable Box/Code: 12/DD
ER-Sponsored Healthcare The cost of employer-sponsored health coverage, which should include both the portion paid by the employer and the portion paid by the employee Not taxable Box/Code: 12/DD
ER-Sponsored Vision The cost of employer-sponsored vision coverage, which should include both the portion paid by the employer and the portion paid by the employee. Not taxable Box/Code: 12/DD
Fringe Benefit FICA Only The value of a fringe benefit that an employee received. The benefit amount is taxable for Social Security and Medicare and is reported as federal, state and local taxable wages on the employee's W-2. State and local taxability varies Reportable Box 3 and 5 Varies Varies
Group Term Life Insurance The cost of the group term life insurance an employee receives in excess of $50,000. Box 1 Box 3 and 5 Box 16, varies Box 18, varies Box/Code: 12/C
HSA Employer Contribution Non-Caf 125 (no FED tax) The elective amount that the employer contributes to an employee's health savings account that is NOT part of an IRS Section 125 (cafeteria) plan. Check with your plan provider for details about your plan. Box 16, varies Box 18, varies Box/Code: 12/W
HSA Employer Contribution Caf 125
(no FED tax)
The elective amount that the employer contributes to an employee's health savings account that is part of an IRS Section 125 (cafeteria) plan. Check with your plan provider for details about your plan. Box 16, varies Box 18, varies Box/Code: 12/W
Misc. Fringe Benefit The value of a taxable fringe benefit that an employee received, such as a prize, club membership, or employer-provided vacation. Box 1 Box 3 and 5 Box 16, varies Box 18, varies
MSA ER Contribution The amount that the employer contributes to an employee's Medical Savings Account. This amount is not taxable to employees and is reported on the employee's W-2 in Box 12 (code R). Check with your plan provider for details about your plan. Both the employee and employer should not make contributions to an employee's MSA in the same year. Not taxable Box/Code: 12/R
Nevada MBT Healthcare The amount that the employer contributes to health insurance or health benefit plan for employees as defined in Nevada Revised Statutes Section 363B.115. DO NOT include any employee-paid amounts. Not taxable
Non-Qual Def Comp Deferral The value of non-qualified deferred compensation provided to an employee that is being deferred. This amount is reported as FICA and FUTA taxable wages in W2 Boxes 3 & 5, but is not paid to the employee. State and Local taxability varies. Box 3 and 5 Box 16, varies Box 18, varies Box/Code: 14/ZN (PA only)
Non-Qual Def Comp Distribution The value of non-qualified deferred compensation that was previously deferred and is now provided to an employee. This amount is reported as Federal taxable wages in W2 Boxes 1 & 11, but is not paid to the employee. State and Local taxability varies. Box 1 and 11 Box 16, varies Box 18, varies Box/Code: 14/YT (PA only)
S-Corp 2% Medical Plan Use to report the value of medical coverage provided by an S Corporation to its 2% shareholder employees. The cost of the premium must be reported on the employee's W-2 as federal wages (but not FICA). State taxability varies Box 1 Box 16 Box 18 Box/Code: 14/S-CORP
S-Corp FIT and FICA taxable Use to report the value of medical coverage provided by S Corporation to its employees. The cost of the premium must be reported on the employee's W-2 for FIT and FICA. State taxability varies. Box 1 Box 3 and 5 Box 16 Box 18 Box/Code: 14/S-CORP
Stock Options - Non Qualified Income from the exercise of non-qualified (non-statutory) stock options. The amount is reported as federal taxable wages. Box 1 Box 3 and 5 Box 16, varies Box 18, varies Box/Code: 12/V
Small ER Health Reimbursement - Single The amount the employer reimburses an employee for the cost of premiums for individual health insurance purchased through the health market. Amounts up to the annual limit are not taxable for FIT, FICA or FUTA. State taxability varies. Box/Code: 12/FF
Small ER Health Reimbursement - Family The amount the employer reimburses an employee for the cost of premiums for family health insurance purchased through the health market. Amounts up to the annual limit are not taxable for FIT, FICA or FUTA. State taxability varies. Box/Code: 12/FF

 


 

Processing an Off-Cycle Payroll

If you want to provide a year-end bonus to your employees, you may want to run an Off-Cycle Payroll after you run your regular payroll. By doing this, your normal payroll processing cycle will not be impacted (i.e., period ending dates and check date).

To create and process an Off-Cycle Payroll for a bonus:

  1. On the homepage, select the Off-Cycle Payroll button.
  2. Under the Pay a Bonus option, click Run Now. 
  3. Fill out the questions that appear in the slider, then click Start Bonus Payroll.
  4. Follow the steps to enter your bonus payroll information.

Important: If this payroll amount will exceed your usual payroll amount, then you should process this payroll 2-3 business days before check date to help ensure timely funds availability to your employees.

What is the difference between a Regular Payroll and an Off-Cycle Payroll?

Regular Payroll Off-Cycle Payroll
This option should be used to process your normal scheduled payroll. This option should be used when processing a payroll that is separate from your regular scheduled payroll. This will prevent any impact to your normal payroll processing cycle.
Includes employee data and scheduled pay information for a specific pre-scheduled time period (for example, a week or a month). Does not include pre-scheduled pay data and specific pre-scheduled time period.
Many of the entries are made automatically. For example, voluntary deductions are automatically included. By following the Off-Cycle Payroll template, your bonus payroll will be updated to reflect the applicable deductions indicated. Make sure to validate this information when you are brought to the payroll screens.

 


 

W-2 Package Information

You will receive your W-2 package from ADP® in the second week of January. The package content differs depending on who has filing responsibility – ADP or you.

W-2 Package includes...

ADP Files

Employees' W‑2 Earning Summaries   
Balancing Form W-2 / W-3 Totals to the Wage & Tax Register  

Please note: ADP files the below forms, but they are not included in your W-2 package: 

  • Form W-3 to Social Security Administration
  • Form W-2 Copy A to Social Security Administration
  • Form W-2 Copy 1 to state, city or local tax department 

Copies of all the above items, including those included in your W-2 Package, can be accessed in the RUN Powered by ADP® (RUN) payroll platform by going to the Quarter & Year-End section under Help & Support.


Changes and Corrections to W-2s:

If you need to make any of the following changes after your W-2s have been created, you will need to correct the W-2s:

  • Change employee specific data that displays on the W-2 (such as name, address, and Social Security Number)
  • Change a payroll check date to the prior year
  • Process a current payroll with manual checks, voids, or third party sick payments using a check date in the prior year.

Correcting a W-2 After it Has Been Filed:

  • If needed, process an Off-Cycle Payroll to correct the employee totals. Important: As ADP files for you, contact your Payroll Service team to determine if an amendment must be filed.
  • Submit your corrections.

The Social Security Administration (SSA) recommends that corrections be made on paper forms. Click here to print copies of the forms.

After a filing to a tax agency has been processed, adjustments to that filing will be processed as an amended return. You will receive an amendment package from ADP for your records.

Viewing the W-2 Report online:

  • Under Reports, select W-2 Statements

The W-2 forms are available 24 hours after ADP processes them. Before that time, you can use the W-2 Preview report to view W-2 information.

All employees are included in one PDF report file. Up to four years of forms are available. Each PDF file contains the most recent W-2 forms generated for your employees.


 

1099 Package Information

You will receive your 1099 package from ADP® in the second week of January. You are responsible for filing Forms 1099-MISC, 1099-NEC and 1096.

1099 Package includes...

You File

1099-MISC: 

  • 1099-M Copy A - The copy of the 1099-M that you send to the IRS for each contractor who receives a 1099-MISC.
  • 1099-M Copy B - The copy of the 1099-MISC that you give directly to the contractor. The contractor includes the 1099-MISC information on personal federal, state and, if applicable, local income tax returns.
  • 1099-M Copy C - The copy of the 1099-MISC that you send to the applicable state and, if applicable, local taxing agency for each contractor who receives a 1099-MISC.

Please note: You will only receive copies of Forms 1099-MISC if you recorded 1099-Rent in the RUN Powered by ADP® platform. 

 

 

 

X

1099-NEC: 

  • 1099-NEC Copy A - Copy of the 1099-NEC that you send to the IRS for each contractor who receives a 1099-NEC. 
  • 1099-NEC Copy B - Copy of the 1099-NEC that you give directly to your contractor. The contractor includes the 1099-NEC information on personal, federal, state and, if applicable, local income tax returns. 
  • 1099-NEC Copy C - Copy of the 1099-NEC that you send to the applicable state, and, if applicable, local taxing agency for each contractor who receives a 1099-NEC. 

 

 

 

X

Federal 1096: The 1099 Transmittal Form, which is a summary of the information contained in the 1099-MISC and 1099-NEC forms. You send one copy to the IRS along with a copy of each of your 1099-MISC and 1099-NEC forms. 


X


Changes and Corrections to 1099s:

If you need to make any of the following changes after your 1099s have been created, you will need to correct the 1099s:

  • Change contractor specific data displayed on the 1099 (such as name, address, and Identification Number - i.e. Social Security Number or federal ID number).
  • Change contractor totals.

Correcting a 1099 After It Has Been Filed:

If you have already filed your 1099s and made changes/corrections, you will need to amend the 1099 and 1096.

More information on correcting a 1099 can be found in section H on the IRS website.

Viewing the 1099 Online:

The 1099 forms are available 24 hours after ADP processes them. To verify amounts on a 1099, use the Earnings Record report for the appropriate calendar year and contractor.

If you have both W-2s and 1099s, you'll find PDF files for both under Reports. Select 1099 to view all contractors. Up to four years of forms are available and each PDF file contains the most recent 1099 forms generated for your contractors.

View the IRS website for additional information on 1099s.


 

Paperless Payroll

Ready to stop waiting for your payroll delivery to arrive? ADP's Paperless Payroll solution provides your payroll reports and pay statements electronically.

Here are a few benefits Paperless Payroll offers you and your employees:

  • Reduced risk. With no paper in transit or filed away, you can worry less about confidential employee data being compromised.
  • More time. No more waiting for the delivery of your employees' payroll and no need to hand out pay statements.
  • Less stress. No more delays in delivery caused by weather or traffic.
  • Employee self service. Employees have 24/7 electronic access to three years of pay statements and can manage their own direct deposit via MyADP (if you choose).
  • Convenience. Access your reports online, at any time.

To Activate Paperless Payroll:

  1. Login to the RUN Powered by ADP® (RUN) platform
  2. Type "Features Overview" into the search bar and select the page from the dropdown
  3. Check the box for Paperless Payroll

To ensure that your employees have MyADP activated, check their employee profile in the RUN platform.

*Employees who currently receive negotiable checks will continue to receive them as they do today.

Most states require employers to provide their employees with a pay statement each pay period. State laws vary as to how the pay statement may be delivered. Employers using electronic delivery should be familiar with the specific requirements for each jurisdiction. In general, employers must provide employees with easy access to their pay statement, the ability to print a copy at no cost, and provide employees with the ability to opt out of electronic delivery at any time. If an employee opts out of receiving electronic pay statements or cannot access electronic pay statements on site, you will need to print and provide a paper pay statement to the employee at the time of the payment of wages. For example, in California, employees must be able to view and print electronic pay statements at the worksite at no cost and may elect to receive paper pay statements at any time. https://www.dir.ca.gov/dlse/opinions/2006-07-06.pdf. Some states, such as Connecticut, Hawaii, Oklahoma and Oregon, also require employers to obtain consent from their employees to deliver pay statements electronically. You should review applicable law in your jurisdiction or reach out to the ADP professional with whom you normally work if you have any questions.

 


 

MyADP

MyADP empowers your employees! They can:

  • Manage their direct deposit information
  • Access 36 months' worth of paystub history and trends
  • View paperless pay statements
  • Access their 401(k), Health Benefits information, and Company Policies, if offered by the company

Don't forget: Your employees/contractors can view their W-2s and 1099s in MyADP, in addition to receiving standard paper copies.

To get your employee(s) registered for MyADP, log into the RUN Powered by ADP® (RUN) platform and go to: 

RUN Powered by ADP® (Left Navigation) RUN Powered by ADP® (Top Navigation)
  1. Click your profile icon in the top-right corner and select Settings 
  2. Under the General Settings section, click Manage MyADP
  3. Add your employee's email address and send them a registration invitation
  1. Go to Company > Employee Access® 
  2. Add your employee's email address and send them a registration invitation

Your employees can also register by going to my.adp.com.