Wrap-Up & Reminders for 2025 Reporting: Webinar Recap

In this final installment of the Greenshades Year-End Power Sessions, we zeroed in on the final details you need to close the year with clarity. Hosted by Kieran O’Connor (Director of Managed Services) and Lauren DeBisschop (Sr. Manager of Content Strategy), this session served as both a checklist and a cheat sheet for January deadlines, February forms, ACA changes, 1042/1042-S compliance, and what's coming in 2026.

From timely reminders to deep dives, this fast-paced wrap-up helped teams across industries get aligned, stay compliant, and prep smarter for next year.

⚠️ Note: This information is for informational purposes only and does not constitute formal tax, legal, or compliance advice. Always consult with qualified tax advisors, legal counsel, and your organization’s internal teams for guidance specific to your situation. Additional regulations may apply. For the most accurate and up-to-date information, refer to official government resources and regulatory agencies.

Filing & Timing: Federal Deadlines

Many deadlines fall on weekends or holidays in 2026. We've talked in depth about W-2s and 1099s, but other forms due at the end of January include the 1098 and Form 940.

• 1098: Reports mortgage interest and other deductible expenses (e.g., 1098-T for tuition).
• Form 940: Reports and pays annual Federal Unemployment Tax (FUTA).

As you’re preparing forms, consider these tips to make sure things go smoothly:

• Reconcile year-end payroll and payment data in advance.
• Use SSA’s Business Services Online for W-2 validation and e-file upload.
• Confirm recipient accuracy and validate TINs.
• E-filing is required for most filers (10+ forms).
• Know your vendor deadlines—they may cut off earlier than IRS deadlines.

Note: For Greenshades clients, to meet IRS deadlines, submit your print and mail requests by EOD January 23.

OBBBA Provisions and Updates

The One Big Beautiful Bill Act (OBBBA) introduced new reporting categories for cash tips and qualified overtime so employees can deduct these earnings.

For tax year 2025, the IRS has offered transitional relief. There are no new boxes or codes on 2025 W-2s or 1099s. If employers do not provide this information to their employees, there are no penalties, as long as the base statement is still accurate and complete.

However, employers are encouraged to share data with employees via portals, Box 14, or separate statements.

Greenshades Support

For this year-end, Greenshades has support for our clients reporting this information:

• Greenshades Payroll Clients: The OT premium will be calculated and available to add to Box 14 of the W-2.
• Non Payroll or YEF-Only Clients: Upload the calculated information in the year-end system and choose between multiple options to share with your employees.

February Items to Remember

Due Feb 17, 2026 (adjusted for weekend):

• 1099-MISC (Box 8 & 10)
  • Box 8: Substitute Payments in Lieu of Dividends or Interest
  • Box 10: Gross Proceeds Paid to an Attorney
• 1099-B: Proceeds from broker and barter transactions
• 1099-S: Gross proceeds from real estate sales

W-4 Reminder

• Employees claiming withholding exemption must submit a new W-4 by Feb 17
• HR should send reminders and set internal cutoffs

Filing Format Note:

• Paper filing due Feb 28
• E-filing required if submitting 10+ forms

March Reminders

March 2, 2026:

• 1095-C due to recipients
• T4/T4A due to Canada Revenue Agency

March 16, 2026:

• Forms 1042 & 1042-S due
  • Reports U.S.-source income to foreign recipients
  • Annual Form 1042 must reconcile all 1042-S forms
  • Payees include foreign individuals, corporations, and partnerships

March 31, 2026:

• Final e-file deadline for 1099s, 1098s, Form 8027
• Form 8027: For food/beverage establishments; report total receipts and tips

1042/1042-S Tips:

• Validate TINs
• Use consistent info across all forms
• Reconcile amounts across 1042/1042-S
• Match withholding by country and income type
  

ACA Reporting Changes

Applicable Large Employers (ALEs)—those with 50 or more full-time equivalent employees—must file Forms 1094-C (transmittal) and 1095-C (individual statements) to report offers of health coverage and enrollment.

2025 Update:

You may now provide Form 1095-C upon request rather than automatically furnishing it to employees.

To stay compliant, you must:

• Post a clear notice on your website that employees can request the form
• Respond to requests within 30 days
• Keep the notice available through October 15, 2026

Important note: Some states with their own ACA mandates, such as California, New Jersey, and Massachusetts, still require direct distribution.

Forms 1042 & 1042-S

Series 1042 is used for reporting U.S. source income paid to foreign individuals or entities. Withholding agents who make payments such as interest, dividends, royalties, compensation, or other U.S. source income to foreign persons.

Common Challenges

• Determining correct withholding rates using applicable tax treaties
• Validating recipient Taxpayer Identification Numbers (TINs) to prevent backup withholding and mismatches
• Reconciling aggregate totals between all Forms 1042-S issued and the annual summary Form 1042

Finish the Year Strong

Compliance doesn’t end at submission. Make sure to:

• Archive & Store: Use secure digital storage. Retain for 3-7 years.
• Post-Mortem Review: Identify wins and gaps with Payroll/HR.
• Update Checklists: Adjust based on 2025 learnings.

Looking Ahead: 2026 Changes

The IRS has issued changes to the 2026 W-2 and 1099 Forms that impact how overtime, tips, and new account types are reported.

W-2 Updates:

• Box 12 codes:
  • TA = Trump account contributions
  • TP = Cash tips
  • TT = Qualified OT
• Box 14 split:
  • 14a = Other
  • 14b = Tipped Occupation Code

1099-MISC:

• 13a = Cash Tips
• 13b = Tipped Occupation Code
• 14 = OT Compensation

1099-NEC:

• 1a = Comp
• 1b = Cash Tips
• 1c = Occupation Code
• 1d = OT Compensation

1099-K:

• New boxes 1a–1d for tips and job codes

Thresholds:

• NEC & MISC rising from $600 → $2,000

Q&A

⚠️ Note: This information is for informational purposes only and does not constitute formal tax, legal, or compliance advice. Always consult with qualified tax advisors, legal counsel, and your organization’s internal teams for guidance specific to your situation. Additional regulations may apply. For the most accurate and up-to-date information, refer to official government resources and regulatory agencies.

Q1: What if you are a salaried employee but are paid overtime at straight time? Can that be removed from gross wages? 

No. Under the One Big Beautiful Bill Act, only FLSA-required overtime premium pay qualifies for the federal income tax deduction. 

• Exempt (salaried) employees: Any extra pay — whether labeled “overtime” or not — does not qualify for the deduction because it is not FLSA-mandated overtime. 
• Non-exempt employees: If overtime is paid for hours over 40 in a workweek, only the premium portion (the amount paid above the employee’s regular rate) may be deducted for federal income tax purposes. 
• Straight-time overtime (1.0x) does not qualify, even for non-exempt employees. 

Q2: What does “overtime premium” actually mean? 

The overtime premium is the extra pay above an employee’s regular rate for overtime work—typically 0.5x extra, resulting in 1.5x total pay for hours over 40 in a week. 

Example: 

• Regular rate: $20/hour 
• Overtime rate: $30/hour 
• Premium portion: $10/hour ← This is the deductible amount 

Only the premium portion qualifies as “qualified overtime compensation” under FLSA rules and the new IRS deduction. 

Q3: Are changes needed to master earning codes to support the new W-2 “TT” reporting for 2026? 

If you're using Greenshades Payroll, Greenshades plans to support the new “TT” Box 12 code (for qualified overtime) through an end-of-year calculation, just like how it handles Box 14 for 2025. There are not currently changes needed to master codes right now.  

Important: Please contact your support representative to confirm you are all set.  

If there are any future regulatory changes, Greenshades will communicate updated guidance to clients. 

Whether you’re archiving final forms or already gearing up for 2026, Greenshades is here to help you stay proactive, confident, and compliant.

🚪 Want to see it in action? Request a personalized demo.