Question 1

What should be on a year-end accounting checklist for a staffing agency?

Accepted Answer

At minimum: reconcile cash, factoring, and receivables; accrue unbilled revenue and payroll for the week that crosses December 31; reconcile all four Forms 941 to your W-2 totals and state wage reports; confirm worker classification and W-9s; and calendar the early-2027 filing deadlines. Staffing firms should also review workers' compensation payroll by class code and any FUTA credit reduction exposure.

Question 2

When are W-2s and 1099-NECs due for tax year 2026?

Accepted Answer

Both are due February 1, 2027, because January 31, 2027 falls on a Sunday. The W-2 deadline applies to employee copies and to filing with the Social Security Administration. The 1099-NEC deadline applies to both the recipient copy and the IRS copy.

Question 3

Do staffing agencies have to report overtime differently on 2026 W-2s?

Accepted Answer

Yes. Starting with tax year 2026, employers must report qualified overtime compensation in Box 12 using code TT. Qualified overtime is generally only the FLSA-required premium above the regular rate, not the full time-and-a-half payment. Employees generally can claim the federal overtime deduction only for amounts reported in code TT, so errors require a corrected Form W-2c.

Question 4

What is the 1099-NEC reporting threshold for 2026?

Accepted Answer

For payments made in 2026, the threshold is $2,000, up from $600. The change comes from the One Big Beautiful Bill Act and applies by payment date, so 2025 payments still used the $600 threshold. Keep collecting Form W-9 from every contractor before the first payment, because small engagements can grow past $2,000.

Question 5

How should a staffing firm handle a payroll week that spans December 31?

Accepted Answer

Accrue the revenue and the wage expense for days worked through December 31 in 2026, even though you invoice and pay them in January. For payroll tax purposes, however, wages are generally taxed when paid, so a paycheck dated in January 2027 counts toward 2027 wage bases and 2027 W-2s. Your books and your payroll reports will differ for that week, and your reconciliation should show why.

Question 6

What is the Social Security wage base for 2027?

Accepted Answer

The Social Security Administration set the 2027 wage base at $192,300, up from $184,500 in 2026. The employer and employee each pay 6.2 percent on wages up to that amount. Confirm your payroll system resets to the new base for the first 2027 check date.

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