W2 Calendar Year End Process

The Calendar Year End process is a critical year-end procedure in the Human Resources module that resets all calendar-year-to-date (YTD) payroll accumulators, prepares the system for the new calendar year, and purges historical data.

The W2 options must be run after the last payroll of the year and before using any Year-End options to start the new calendar year.

Perform the following procedures in sequence to complete the W2 Calendar Year End process.

1. Set Up W2 Parameters

2. Set Up Employer Records

3. Copy W2 Information

4. Calendar Year End Reports

5. Calendar Year End

6. Post Future Changes

7. Employee Deduction Updates

8. Human Resources Profile

9. Create Employee W2 Work File

10. W2 Address Change Prompt

11. Employee W2 File Update

12. Employee W2 File Edit Reports

13. Print W2 Forms

14. Create W2 Electronic File

15. Employee W2 File Purge

Set Up W2 Parameters

Menu path

From the Human Resources menu, select Periodic Routines. From the Year End menu, select W2 Processing. Select Set Up W2 Parameters.

W2 Wizard: W2 Parameters

Use the W2 Wizard: W2 Parameters page to configure all the essential information required to generate and print W2 forms. This is the first step in the W2 Processing setup workflow.

1. On the W2 Wizard: W2 Parameters page, refer to W2 Wizard: W2 Parameters and update the fields as required.

2. Select Next.

W2 Wizard: W2 Print Controls

Use the W2 Wizard: W2 Print Controls page to configure how W2 forms are generated, printed, and submitted electronically to the Social Security Administration (SSA).

1. On the W2 Wizard: W2 Print Controls page, refer to W2 Wizard: W2 Print Controls and update the fields as required.

2. Select Next.

Set Up Employer Records

Use the W2 Processing - Maintain Employer W2 page to create, search, edit, and manage multiple employer records for W2 processing. This is essential for organizations that need to generate W2s for employees under different employer entities or for multiple tax years.

You must set up your employer information before copying W2 information to the work file.

1. On the W2 Processing - Maintain Employer W2 page, select Edit.

2. On the W2 Wizard: W2 Employer Maintenance page, enter the Search Criteria to find the required records, and then select Search.
   Refer to Search for records for more information.

3. To add a record, select Add new. Refer to Set Up W2 Employer Records, enter valid information, and select Accept.

4. Select the Back button twice to return to the W2 Processing - Maintain Employer W2 page.

5. Select Next.

Copy W2 Information

Use the W2 Wizard: Copy W2 page to copy the current employee payroll data into the W2 work tables for later use in creating the W2 workfile. This is a critical step that creates a snapshot of year-to-date (YTD) payroll information before generating W2 forms.

This process must be completed after the 2025 Pay Runs are completed and before creating 2026 Pay Runs. It must be completed before running the Calendar Year End Procedures.

1. On the W2 Wizard: Copy W2 page, select Copy, and then Yes.

2. On the Print dialog, select a Destination for the W2 Payroll/Deduction Copy Error Log:

   • Select File to create the log in .log format. The default file name is w2copy.log. You can change the default file name.

   • Select Screen to download the log in .pdf format. The default file name is <name>.pdf.

     • Select OK.

       • Download the .rpt file from the View Files page.

       • Select OK twice and save the .pdf file.
         For more information about the Print option, refer to Print Reports.

3. On the W2 Wizard: W2 Workfile Load Criteria page, select Finish.

4. Navigate to the folder containing the log file.

5. Inspect the file and update the source data if necessary.

For more information, refer to Copy W2 Information.

Calendar Year End Reports

Menu paths

• From the Human Resources menu, select Reports. From the Periodic menu, run the following reports:

  • 941 Quarterly Federal Tax Return

  • Calendar YTD

  • Current, Monthly or Quarterly Salary Data

• From the Human Resources menu, select Periodic Routines. From the Periodic Processing menu, run the Payroll History option.

PowerSchool recommends a complete database backup before proceeding to the next steps. Backups are completed nightly for hosted customers.

Calendar Year End

Use the Calendar Year End page to reset all calendar-year-to-date (YTD) payroll accumulators and purge old historical data, preparing the payroll system for a new calendar year.

This step must be completed after the final pay run of the calendar year has been processed, including any manual, adjustment, or voided checks. Calendar-year-end reports and compliance reports must also be completed before clearing balances. Balances must be cleared before creating pay runs for the new calendar year.

Menu path

From the Human Resources menu, select Periodic Routines. From the Year End menu, run the Calendar option.

Post Future Changes

Use the Future Changes menu to stage and schedule changes to payroll reference tables in advance before they become effective. Changes are stored in batch tables and can be posted to the live tables on or after a specified effective date.

Posting Future Changes is optional and may be used to prepare for the next calendar year. If these steps are already completed or are not needed, proceed to Human Resources Profile.

Menu path

From the Human Resources menu, select Reference Tables. From the Future Changes menu, run the following options:

• Deductions

• Federal Tax Codes

• FICA Tax Codes

• Local Tax Codes

• State Tax Codes

The annual Federal tax table is provided on PowerSource once available. This file can be loaded and posted using the Future Federal Tax page. You will then need to use the Generate option to generate the appropriate tax frequency for your district.

For up-to-date Federal tax rate information, refer to IRS Publication 15 on the www.irs.gov website.

Employee Deduction Updates

Employee Deduction Updates is optional and may be used to prepare for the next calendar year. If these steps are already completed or are not needed, proceed to Human Resources Profile.

Deduction changes effective the first payroll of the new year:

• Table Driven: Update deduction codes on the Deduction Table page.

• Employee-Driven: Employee Deduction Amounts may be loaded using the Benefit Interface option. Use the File Import and Data Selection - Batch Deduction page or manually enter the changes on the employee deduction record.

Menu paths

• From the Human Resources menu, select Reference Tables. From the Payroll menu, use the Deductions option to update employee deductions if required.

• From the Human Resources menu, select Periodic Routines. From the Periodic Processing menu, run the Benefits Interface option.

• From the Human Resources menu, select Periodic Routines. From the Periodic Processing menu, select Effective Date Changes. On the Effective Date Changes page, select Deductions.

Human Resources Profile

Menu path

From the System Administration menu, select Administration. From the Profiles menu, select Human Resources Profile. Select the Federal/State Reporting tab.

Update the Report Year field to reflect the new calendar year.

Create Employee W2 Work File

Menu path

From the Human Resources menu, select Periodic Routines. From the Year End menu, select W2 Processing. Select Create Employee W2 File.

W2 Wizard: W2 Workfile Load Criteria

Use the W2 Wizard: W2 Workfile Load Criteria page to specify the criteria for generating employee W2 work files from payroll data.

Verify that the Year-End release for your state is installed before completing this step.

Customers using the Employee Access Center should verify that the Hide W-2 Year field is set to 2025 before executing this procedure. Refer to Employee Access Center Year End Process for more information.

1. In the Control Number field, enter the control number associated with the Employer record and select Next.

2. On the W2 Wizard: W2 Workfile Pay Groups page, enter the pay groups to be loaded into the workfile. Enter an asterisk (*) in the first box to include all pay groups. Select Next.

3. On the W2 Wizard: W2 Workfile Code Updates page, select Box 12 Codes.

4. On the W2 Wizard: W2 Workfile Box 12 page, refer to W2 Workfile Box 12 Page and update the fields as required. Select Back.

5. On the W2 Wizard: W2 Workfile Code Updates page, select Box 14 Codes.

6. On the W2 Wizard: W2 Workfile Box 14 page, refer to W2 Workfile Box 14 Page and update the fields as required. Select Back.

7. On the W2 Wizard: W2 Workfile Code Updates page, select Dependent Care Codes.

8. On the W2 Wizard: W2 Workfile Dependent Care page, refer to W2 Workfile Dependent Care Page and update the fields as required. Select Back.

9. On the W2 Wizard: W2 Workfile Code Updates page, select Pension Codes.

10. On the W2 Wizard: W2 Workfile Pension page, refer to W2 Workfile Pension Page and update the fields as required. Select Back.

11. Select Finish.

The system will copy the following codes from year to year:

• Box 12 Codes

• Box 14 Codes

• Dependent Care Codes

• Pension Codes

Access the individual pages to update codes as required:

• Local Tax Codes

• Create Employee W2 File

W2 Address Change Prompt

Menu path

From the Human Resources menu, select Periodic Routines. From the Year End menu, select W2 Processing.

Select W2 Address Prompting Enabled.

If you make changes to Employee Information or Effective Date Changes Demographics records, a message displays asking if you want to update the W2 and 1099R records with the changes for:

• Social Security number

• Employee Name

• Employee Address

This message will only display if:

• W2 Address Prompting Enabled is selected.

• The system month is January.

• W2/1099-R information exists for the prior year.

Employee W2 File Update

Use the W2 Processing - W2 Employee File Update page to search, view, add, and edit individual employee W2 records in the W2 work file (w2employee table). This is where users can make corrections or adjustments to W2 data before printing forms or generating electronic files.

Menu path

From the Human Resources menu, select Periodic Routines. From the Year End menu, select W2 Processing. Select Employee W2 File Update.

1. On the W2 Processing - W2 Employee File Update page, select Search, refer to Employee W2 File Update, and review/update the loaded employee records as required.

2. Refer to Employee W2 File Update - Import Box 12 and Import Box 14, and import the Box 12 and Box 14 data.

For a list of valid Box 12 codes, refer to 2025 General Instructions for Forms W-2 and W-3 on the www.irs.gov website.

Employee W2 File Edit Reports

Use the W2 Processing - Employee W2 File Edit Reports page to generate validation and verification reports of employee W2 data. These reports help users identify errors, verify totals, and ensure W2 data is accurate before printing forms or submitting electronic files.

Menu path

From the Human Resources menu, select Periodic Routines. From the Year End menu, select W2 Processing. Select Employee W2 File Edit Reports.

1. Refer to Employee W2 File Edit Reports and generate the reports.

2. Select Back.

Print W2 Forms

Use the W2 Processing - Print W2 Forms page to print physical W2 forms for employees. It provides multiple printing options to handle various scenarios, including bulk printing, reprints, and individual W2s.

Ensure all calendar-year-end updates have been installed before printing W2s.

Menu path

From the Human Resources menu, select Periodic Routines. From the Year End menu, select W2 Processing. Select Print W2 Forms.

On the W2 Processing - Print W2 Forms page, use the following options as required:

• Print All W2 Forms

• Restart W2 Printing

• Print an Individual W2

• Print Total W2

Create W2 Electronic File

Use the W2 Processing - Create W2 Electronic File page to generate electronic W2 files for submission to the Social Security Administration (SSA) and/or state tax agencies.

Ensure all calendar year-end updates, including state-specific updates, have been installed before creating the electronic file.

Menu path

From the Human Resources menu, select Periodic Routines. From the Year End menu, select W2 Processing. Select Create W2 Electronic File.

Refer to Create W2 Electronic File and create the W2 electronic file.

Employee W2 File Purge

Use the W2 Processing - Employee W2 File Purge page to delete W2 work file records for a specific tax year and control number. This removes employee W2 data from the work tables when it's no longer needed or when you need to recreate W2 files from scratch.

This step is optional and should be used only if you need to reset the workfile completely.

Menu path

From the Human Resources menu, select Periodic Routines. From the Year End menu, select W2 Processing. Select Employee W2 File Purge.

Refer to Employee W2 File Purge and purge employee W2 data as required.