Year-End Information for Square Payroll
Each year Square Payroll emails employers a year-end guide and timeline which walks you through what you need to have prepared at the end of year (EOY) for annual federal and state tax filings and how to prepare for the upcoming year. You can find this on Payroll in Square Dashboard as well. We recommend reading through the year-end guide to help ensure all of your business and team information is up to date before we file your annual payroll taxes.
We recommend taking these actions by the following dates. You can also find this timeline by going to Payroll in Square Dashboard.
These actions should be completed by their respective deadlines:
|Review draft Form W-2s. Note: Draft Form W-2s are available year-round in your Tax Forms tab.
|January 4, 2024
|Review draft Form 1099-NECs. Note: Draft Form 1099-NECs begin generating on December 19, 2023.
|January 4, 2024
|Review and update paper mail settings for Form W-2 and/or Form 1099-NEC.
|January 4, 2024
|Update State Unemployment Insurance (SUI) tax rate
|December 31, 2023, or before your first payroll run with a 2024 pay date
|Update benefits, sick and/or paid time off
|Before your first payroll run with a 2024 pay date
|Last day to run an off-cycle payment for 2023
|January 4, 2024
|Last day to update team member's name, SSN, and address on draft forms
|January 4, 2024
|Last day to delete a payroll run or a team member’s pay stub from your payroll history and exclude the pay and tax information from your filings
|January 4, 2024
|Annual 2023 and Q4 2023 tax filings complete. Finalized Form W-2s and/or Form 1099-NECs are filed with the tax agencies and digital copies are posted to your online Square Dashboard. If you opt in to paper mail by January 4, 2024, physical copies will be mailed to each of your team members. Note: Additional state filings for DE, IA, MI, NJ, OH, or PA will be completed by the state deadline of February 28, 2024.
|January 31, 2024
Review Form W-2 and/or Form 1099 paper mailing settings
Square Payroll sends annual tax forms W-2 and 1099-NEC to your team members electronically by default. If you prefer that your team receives mailed paper versions of their tax forms, you’ll need to opt in from your Payroll Settings by January 4, 2024.
Review team member information
Confirm your employee and contractors’ first and last names, Social Security numbers (SSN), and home addresses by going to Staff > Team in your online Square Dashboard. This information will be printed on each of their Form W-2s and/or Form 1099-NECs. The last day to make changes to the draft Form W-2s and Form 1099-NECs is January 4, 2024. Digital copies of the tax forms will be available to your team through their online Team Member dashboard or in the Team App by January 31, 2024.
Add all former team members to Square Payroll
Double-check that all employees you’ve paid this year—including those who no longer work for you— have been added to Square Payroll. You are responsible for providing Form W-2 to all employees you paid in 2023. Learn more about adding employees to Square Payroll.
Previous payroll history should be provided to Square Payroll immediately after switching providers. If you have not transferred your year-to-date payroll history yet, please contact us as soon as possible and we will attempt to accommodate this request.
Contractor payments made prior to switching to Square Payroll can be made by signing in to Payroll in Square Dashboard. Choose the pay period and set the payment method to Pay All by Check to ensure the contractor is not paid an additional time. Add the contractors and paid amounts, then confirm the pay run. Payments made by January 4, 2024 will be reported on their 2023 Form 1099-NECs. The option to process a contractor payments with a 2023 pay date is only available for accounts that had an active Square Payroll account in that year.
Send your final payroll
Payroll taxes are due based on the pay date, not the days employees worked. Any paychecks with a January 2024 pay date—regardless of the actual pay period—will be included in 2024 tax filings and annual Form W-2s. If you’d like wages to be included in 2023 Form W-2s, make sure the pay date recorded in Square Payroll is in 2023 before sending.
You’ll be able to send off-cycle payments and contractor payments for 2023 until January 4, 2024. Note: Off-cycle payrolls processed in 2024 may result in tax penalties. We recommend processing payroll as early as possible. This option is only available for accounts that had an active Square Payroll account in 2023.
Pay year-end bonuses
You can pay year-end bonuses by running an off-cycle payment. When running the off-cycle payment, select Bonus or Supplemental Pay as the payment type and enter the desired amount under the Additional Pay column. Taxes will be calculated using the supplemental federal withholding rate of 22%. If you want bonuses to count towards 2023 wages, submit an off-cycle payment by January 4, 2024.
Note: Off-cycle payrolls processed in 2024 may result in tax penalties. We recommend paying out bonuses as early as possible. This option is only available for accounts that had an active Square Payroll account in 2023.
Update State Unemployment Insurance (SUI) rate
Once you receive your new state UI rate, you can update it by going to Staff > Payroll > Settings > Tax Info in Square Dashboard. We recommend doing this before running your first payroll of 2024. If the rate is updated in the middle of the quarter, Square Payroll will recalculate your UI taxes and credit or debit your account based on the UI rate at the end of the quarter.
If you’re in CA, NY, VA, PA, WA, or WI, we will automatically update this rate for you. We recommend you visit the Payroll Dashboard to verify the accuracy of your account number and rate.
If you do not have the option to update your UI rate from your Dashboard, please Contact Square Support for assistance.
Reset sick and/or paid time off (PTO) balances
Employee sick leave and/or PTO balances automatically roll over to the new calendar year. If you need to reset an employee’s sick leave and/or PTO balances, we recommend resetting these prior to sending your first pay run in 2024. You can update your employees’ sick leave and/or PTO balance on an employee’s profile by going to Staff > Team in your online Square Dashboard.
Note: Depending on your state, you may be required by law to carry over accrued and unused paid sick leave balances to the new year.
Reset benefit contribution and post-tax deduction limits
Benefit and post-tax deduction limits apply to each calendar year. If you manage any benefits outside of Square Payroll, you can set up and adjust annual contribution limits for each benefit on an employee’s profile by going to Staff > Team in your online Square Dashboard.
We recommend setting up your 2024 contribution limits prior to sending your first pay run in 2024. If you do not set any benefit or post-tax contributions, your 2024 limit will be set to your existing 2023 limit.
No further action is required for employers using our SimplyInsured or Guideline benefit integrations.
S-Corp Health Insurance reporting
If health and accident insurance premiums were paid for by a S-Corporation, shareholders with at least 2% ownership are required to report premiums as wages on their W-2s (subject to income tax withholding). You can read more about S-Corporation health premium reporting on the IRS website.
If you are set up as an S-Corporation on Square Payroll, starting on December 1, 2023, you can report premium amounts by visiting your Square Dashboard and selecting Payroll > Overview. Then, select the Report health insurance premiums task from your year-end checklist.
Note: Health insurance premiums must be submitted by January 4, 2024. Refer to your tax professional or the IRS website for more information.
FUTA Credit Reduction in CA and NY
Employers in California and New York are required to pay an additional 0.6% in Federal Unemployment (FUTA) tax on 2023 wages due to a retroactive adjustment to the FUTA tax rate.
Square Payroll will calculate, debit and pay this tax adjustment on your behalf. Impacted employers will receive an email in January 2024 with the calculated FUTA credit adjustment debit amount. You can learn more information about the 2023 FUTA Credit Reduction in our Support Center.
Ensure that your taxpayer address is up to date so that your business’ tax reporting is accurate. If the taxpayer address that is on file with Square Payroll does not match what the IRS or your state agency has on file for you, there may be issues with your tax filings or payments. In the instance that tax forms are mailed to your business, you’ll want to have the correct address on file as well.
You are able to update your taxpayer address directly from your online Square dashboard. To do so:
1. Log into your online Square Payroll Dashboard and click Settings > Business Info.
3. Select Edit next to your Taxpayer Address and provide your correct address.
4. Press Save.
Note: Your updated Taxpayer Address cannot be in a new tax jurisdiction. If you need to pay W-2 employees across work locations or multiple tax jurisdictions different from your business’ primary address, add the additional work addresses in your team member's profiles from the Team tab. From there, go to the Tax Info tab to add your state tax account information for the additional work locations.
Federal and state tax filings
Square Payroll completes federal and state tax filings and payments on your behalf at no additional charge. Once these forms are filed with the appropriate agencies, you can download, save, and print each document by going to Staff > Tax Forms in your online Square Dashboard. See the Square Payroll tax filings and payments article for a full list of tax forms we handle.
Square Payroll will provide you with a digital copy of Form W-2 and Form 1099-NEC by January 31, 2024 for each team member that was paid in 2023. You should print these forms and provide physical copies to each team member, unless you have consent from a team member for electronic-only delivery. In that case, you can email tax forms to those team members, or team members with online accounts can also access their tax forms through their online payroll account or through the Square Team App.
If you would prefer for Square Payroll to mail paper Form W-2 or Form 1099-NEC to your team, navigate to your Payroll Settings tab and toggle on Send W-2s and 1099s via paper mail by January 4, 2024. Square Payroll will mail a tax form to the addresses on file for all team members that were paid in the prior tax year. To receive paper copies of forms W-2 and 1099-NEC by mail, there is a fee of $3 per employee or contractor.