2026 year-end tax planning can help individuals and businesses prepare for tax season, identify potential tax-saving opportunities, and avoid unexpected tax bills.
Changes in income, employment, investments, or family circumstances can all affect your taxes, making year-end planning an important step toward staying organized and prepared.
2026 Year-End Tax Planning for Individuals
Review Your Income, Withholding, and Tax Payments
Review your total income for the year, including wages, bonuses, self-employment income, investment income, and any additional sources of earnings.
If you changed jobs, experienced a significant income change, or had changes in your family circumstances, review your tax withholding to determine whether enough tax has been paid throughout the year.
The IRS offers a Tax Withholding Estimator to help taxpayers determine whether their current withholding is appropriate.
Consider Life Changes and Potential Tax Benefits
Major life events, such as marriage, divorce, the birth or adoption of a child, purchasing or selling a home, retirement, or starting a business, may affect your filing status, deductions, credits, or overall tax liability.
Review any changes that occurred during the year and consider whether they may affect your upcoming tax return.
Organize Your Tax Documents and Records
Most tax forms begin arriving in January, so organizing your records ahead of time can make tax preparation easier.
Start gathering important documents, including:
- W-2s and 1099s for wages and other income.
- Mortgage interest statements (Form 1098) and property tax records.
- Brokerage and investment statements, including records of investment sales.
- K-1s from partnerships, S corporations, or trusts, when applicable.
- Records of charitable contributions and potentially deductible expenses.
- Documentation of major purchases, asset acquisitions, and business expenses, if applicable.
- Records of estimated tax payments and other relevant tax payments.
Keep receipts and acknowledgment letters for charitable contributions, as well as supporting documentation for other expenses that may qualify for deductions or credits.
Remember that eligibility requirements vary, and not every expense is deductible.
Review Retirement Contributions and Tax-Saving Opportunities
Before December 31, review your contributions to employer-sponsored retirement plans, such as a 401(k) or 403(b), and check the applicable annual contribution limits.
Depending on your circumstances, you may also want to review potential contributions to a traditional or Roth IRA. Contribution deadlines and tax benefits vary by account type, so it’s important to understand which rules apply to your situation.
2026 Year-End Tax Planning for Business Owners
For business owners, 2026 year-end tax planning involves reviewing financial performance, organizing records, and identifying opportunities to improve cash flow, reduce tax liabilities, and prepare for the upcoming year.
Review Financial Statements and Cash Flow
Review your balance sheet, profit and loss statement, and cash flow to evaluate your business’s financial performance. Examine income, expenses, outstanding liabilities, accounts receivable, accounts payable, and inventory, if applicable.
Address any outdated bookkeeping, misclassified expenses, or unrecorded transactions, and ensure personal and business expenses are properly separated.
Follow up on unpaid invoices, monitor spending, and ensure sufficient cash is available for upcoming expenses and tax obligations. This review can help identify areas for improvement and guide financial decisions for the coming year.
Review Year-End Tax Obligations
Review outstanding federal, state, and local tax obligations, including estimated income tax payments, payroll taxes, and sales taxes, to ensure required payments and filings are current.
Confirm that payroll records and employee information are accurate and that sufficient funds are available for upcoming tax liabilities.
Consult your accountant to identify any outstanding obligations and confirm applicable deadlines.
Prepare for 1099 Filing Requirements
If your business pays independent contractors or other reportable vendors, request completed Forms W-9 before year-end whenever possible.
Having accurate taxpayer identification information on file makes preparing Forms 1099 easier and helps reduce filing errors and potential penalties.
Beginning with payments made in 2026, the reporting threshold for many payments reported on Forms 1099-NEC and 1099-MISC increases from $600 to $2,000.
For payments made during 2026, Forms 1099-NEC are generally due to recipients and the IRS by February 1, 2027, as January 31 falls on a Sunday.
Other Forms 1099 may have different deadlines, so confirm which reporting requirements apply to your business.
For additional information, review the IRS Instructions for Forms 1099-MISC and 1099-NEC.
Review Year-End Purchases and Tax Planning Opportunities
Before making significant purchases, such as equipment, vehicles, or technology upgrades, consider the potential tax implications. Depending on the purchase, business use, and applicable tax rules, these investments may qualify for depreciation deductions or other tax benefits. However, financial decisions should be based on business needs, not solely on potential tax savings.
Year-end is also a good time to review retirement plan contributions, estimated tax payments, and other tax-planning opportunities before applicable deadlines. DJL’s tax planning services can help you evaluate your options and make informed financial decisions.
Plan Ahead for the New Year
Beyond preparing for tax season, year-end is an opportunity to evaluate your business goals, budget, pricing, expenses, and anticipated cash flow needs.
Consider any significant financial decisions planned for the coming year and discuss potential tax implications with your accountant. Proactive planning can help your business enter 2027 with a clearer financial picture and a stronger strategy for the future.
Final Takeaway: Prepare Now for a Smoother Tax Season
Taking action before December 31 can help individuals and businesses make the most of available tax-planning opportunities and approach the new year with greater confidence.
For individuals, this may include reviewing income and withholding, accounting for major life changes, and gathering documentation for deductions and credits.
For businesses, it means ensuring accurate bookkeeping, reviewing financial performance, preparing for 1099 reporting, and discussing significant financial decisions with an accountant.
The most important takeaway? Don’t wait until tax season to start planning.
Every financial situation is different, and some opportunities must be addressed before year-end. Contact DJL to review your tax situation, discuss potential strategies, and prepare for the year ahead.
A little planning now can go a long way toward a smoother tax season.