Annual checklist (refreshed for 2026)

Year-End Tax Planning Checklist — 2026 Edition

Twenty-five action items to optimize your tax position before December 31. Organized by income tier, entity type, and personal situation.

Best for: Small business owners and high-income individuals. Best worked through in October–November with your CPA, with December 31 as the action deadline for most items.

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Universal SMB items (8)

□ Project YTD income vs prior year — high or low? Different strategies follow.
□ If high-income year: defer December billing (cash basis), accelerate deductible expenses, max retirement contributions.
□ If low-income year: accelerate income, convert traditional IRA to Roth, harvest capital gains at lower bracket.
□ Confirm Q4 estimated tax payments will hit the safe harbor (100% / 110% of prior year, or 90% of current year).
□ Equipment purchases — Section 179 and 20% bonus depreciation (2026 rate). Must be PLACED IN SERVICE by 12/31.
□ 1099-NEC readiness — confirm W-9s on file for every contractor paid $600+ this year.
□ State estimated tax payments — pay by 12/31 to deduct on current-year Schedule A if itemizing (subject to SALT cap).
□ Charitable giving — cash, appreciated stock, donor-advised funds. Consider bunching to itemize.

Retirement plan items (7)

□ Solo 401(k) — plan MUST be established by 12/31 to count for current year (funding can be later).
□ Defined benefit / cash balance plan — same establishment deadline of 12/31.
□ SEP-IRA — more flexible: both establish and fund up to extended return due date.
□ Required Minimum Distributions (RMDs) — for owners 73+, take by 12/31 or face 25% penalty.
□ Roth conversion — at lower tax bracket years, convert traditional to Roth (no income limit on conversions).
□ Backdoor Roth — non-deductible traditional IRA contribution + immediate conversion to Roth. Confirm pro-rata rule.
□ Mega Backdoor Roth — if your 401(k) plan allows after-tax contributions and in-service conversion.

S-corp specific (5)

□ Run YTD owner W-2 wages vs reasonable comp benchmark. Bring up via December bonus run if needed.
□ Document the reasonable comp analysis with BLS data, role description, and hours worked.
□ Owner health insurance — confirm included in W-2 Box 1 (over 2% shareholders).
□ Accountable plan reimbursements — submit Q4 expense reports before year-end.
□ Confirm S-corp election is still in force — review IRS records.

Real estate items (3)

□ Cost segregation study on any property placed in service this year — accelerate Year-1 deductions.
□ §469(c)(7)(A) election — confirm filed if claiming REPS this year.
□ 1031 exchange — 45-day identification and 180-day closing for any Q3/Q4 sales.

High-income individual items (2)

□ ISO exercise model — calculate optimal annual exercise amount staying below AMT inflection.
□ Capital gain/loss harvest — sell losers to offset gains. Watch the wash-sale rule (30 days each direction).

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