Year-End Tax Prep: The December Checklist

The December Tax Checklist

YEAR-END TAX CHECKLIST: □ Estimate total annual income □ Calculate current tax liability □ Review deductible expenses □ Accelerate purchases if beneficial □ Defer income if beneficial □ Maximize retirement contributions □ Review vehicle mileage logs □ Organize receipts and records □ Schedule CPA meeting □ Make Q4 estimated tax payment

Estimate Your Tax Situation

Before making moves, understand where you stand:

ROUGH ESTIMATE: Total revenue: $________ Minus expenses: $________ Net profit: $________ Estimated tax: Self-employment (15.3%): $________ Income tax (~20-25%): $________ Total estimated: $________ Compare to quarterly payments made. Owe more? Consider deduction acceleration. Getting refund? You overpaid quarterlies.

Accelerate Deductions

If you're having a high-income year:

Buy Equipment Now

• Planned purchases — make them by Dec 31
• Section 179 lets you deduct immediately
• Must be purchased AND placed in service by year-end

Stock Up on Supplies

• Buy supplies you'll use in Q1 now
• Deductible this year
• Don't go crazy — only buy what you'll actually use

Prepay Expenses

• January rent paid in December = December deduction
• Next year's insurance (some rules apply)
• Professional dues/subscriptions

Defer Income

If next year looks lower, delay income:

• Invoice large December jobs in January
• Schedule big jobs for early January
• Delay collecting receivables until January

Note: Only defer if it makes tax sense. Cash flow still matters. Don't hurt your business to save taxes.

Maximize Retirement Contributions

RETIREMENT ACCOUNT LIMITS (check current limits): SEP-IRA: 25% of net self-employment income (up to $72,000 for 2026) Solo 401(k): Up to $72,000 for 2026 (employee + employer contributions) Traditional IRA: $7,500 ($8,600 if 50+) for 2026 Contributions reduce taxable income dollar for dollar. Example: $100,000 net profit $15,000 SEP contribution Taxable income: $85,000 At 30% combined rate: Tax savings: $4,500

Vehicle and Mileage

• Finalize mileage logs before year-end
• Calculate total business miles
• Compare standard mileage vs. actual expense
• Ensure documentation is complete

Organize Records

ORGANIZE BEFORE YEAR-END: □ All business receipts (digital or paper) □ Bank statements (all 12 months) □ Credit card statements □ Payment processor reports (Stripe, Square) □ Vehicle mileage log □ Home office measurements (if applicable) □ Equipment purchase records □ Insurance payments □ Contractor payments (1099 prep)

Q4 Estimated Tax Payment

Due January 15. Calculate based on full-year estimate:

• If you've underpaid, make it up in Q4
• Avoid underpayment penalties
• Your CPA can help calculate