Last updated: October 23, 2026
W-2s for 2026 are due to your employees by February 1, 2027. The W-2 mistakes that end up on them were made months ago.
A missed bonus. A health insurance premium that never ran through payroll. An employee who moved to Wisconsin in June and never told anyone. None of it hurts until January, when it shows up on a form your employee hands to their tax preparer.
Here are the year-end payroll mistakes we see most often on W-2s, and how to catch each one in November while it’s still easy to fix.
What are the most common W-2 mistakes?
The most common W-2 mistakes are wrong names or Social Security numbers, missing taxable fringe benefits, S-corp owner health insurance left out of wages, miscoded retirement contributions, wrong state withholding for cross-border employees, year-end bonuses landing in the wrong year, and misclassified contractors. Almost all of them can be caught with a payroll review in November or early December.
When are W-2s due for 2026
The W-2 deadline is normally January 31. In 2027, January 31 falls on a Sunday, so the deadline moves to Monday, February 1, 2027. That date covers both handling copies to employees and filing with the Social Security Administration.
Form 1099-NEC share the same deadline. Illinois and Wisconsin also require W-2 information to be filed with the state, so confirm your state filing method with your payroll provider.
The 7 W-2 mistakes we see at year-end
1. Wrong names or Social Security numbers
If a name or SSN on file doesn’t match Social Security’s records, the W-2 won’t match either. Employees who married, divorced, or gave you a typo on day one are the usual suspects.
The November fix: Ask employees to confirm their legal name and mailing address. The Social Security Administration’s free Social Security Number Verification Service lets employers check names and numbers before filing.
2. Taxable fringe benefits that never hit payroll
Personal use of a company vehicle, gift cards, and certain other perks are taxable wages. If they never ran through payroll, they’re missing from the W-2.
The November fix: List every non-cash perk you gave this year, including holiday gift cards. Get the list to your payroll provider before the final payroll of the year.
3. S-corp owner health insurance left out of wages
If you own more than 2% of an S-corp and the company pays your health insurance, those premiums belong in your W-2 wages. They’re generally not subject to Social Security and Medicare tax, but they still need to be reported. This one gets missed constantly.
The November fix: Total the premiums paid for each owner and add them through payroll before year-end. Your accountant and your payroll provider should both have the same number. (If they don’t talk to each other, that’s its own problem.)
4. Retirement contributions coded wrong
401(k) and SIMPLE IRA deferrals each get a specific code in Box 12. The Box 13 retirement plan checkbox also matters, because it affects whether employees can deduct IRA contributions. A wrong code or a missed box creates headaches at tax time.
The November fix: Compare year-to-date deferrals in payroll to what your retirement plan provider shows. They should match to the penny.
5. Wrong state withholding for Illinois–Wisconsin commuters
Illinois and Wisconsin have a reciprocal agreement. An employee who lives in one state and works in the other can generally have tax withheld only for their home state, if the right form is on file. That’s the Illinois–Wisconsin reciprocity rule in plain English.
Wisconsin residents working in Illinois use Form IL-W-5-NR. Illinois residents working in Wisconsin use Form W-220. If the form is missing, withholding goes to the wrong state, and the W-2 shows it.
The November fix: Pull a list of every employee whose home address is across the state line, including anyone who moved this year. Confirm the form is on file and their address is current.
6. Year-end bonuses landing in the wrong year
Wages count in the year they’re paid, not the year they’re earned. A bonus paid December 31 lands on the 2026 W-2. The same bonus paid January 2 lands on 2027.
Neither is wrong. But it should be a decision, not an accident. The November fix: Pick the bonus payroll date now, and ask your accountant which year makes more sense for you.
7. Contractors who should have been employees
If someone got a 1099 all year, but you set their hours, supplied their tools, and treated them like staff, they may be an employee. Fixing that after forms are filed gets expensive.
The November fix: Review every 1099 worker against the IRS guidance on independent contractors vs. employees. If any look shaky, talk to us before January.
What happens if a W-2 is wrong?
You file a corrected form, Form W-2c, with the employee and the Social Security Administration. It’s fixable. But each correction takes time, confuses employees who may have already filed, and can carry IRS penalties for incorrect or late forms. The IRS covers the rules in its General Instructions for Forms W-2 and W-3.
Here’s what we see: the corrections almost always trace back to something that was knowable in November.
Your November year-end payroll checklist
Before the final payroll of the year, run through this list to catch W-2 mistakes early:
- Confirm legal names, SSNs, and mailing addresses for every employee.
- Run taxable fringe benefits and gift cards through payroll.
- Add 2% plus S-corp owner health premiums to owner wages.
- Reconcile retirement deferrals with your plan provider.
- Confirm reciprocity forms for Illinois-Wisconsin commuters.
- Set the date of any year-end bonus payroll.
- Review 1099 workers for classification.
- Confirm your W-2 and 1099-NEC filing method and the February 1, 2027 deadline.
What this means for you
W-2 mistakes are almost never January problems. They’re November problems nobody looked at. An hour of review now saves a stack of corrected forms later, and a few awkward conversations with employees.
If you’re wondering what payroll should cost when it’s done right, our breakdown of what payroll costs for a small business lays it out. You can also see how Payroll Freedom handles payroll for Illinois and Wisconsin
This article is provided for general informational purposes only and does not constitute tax, legal, accounting, or financial advice. Every business situation is different. Before acting on anything you read here, please consult with a qualified advisor — including, we hope, us. Reach out to Accounting Freedom or Payroll Freedom for guidance specific to your situation.
