Year-End Information

Pull together every income document, every deduction receipt, and a copy of last year’s return before you sit down with anyone. That’s the short version, and it sounds obvious, but the year end information clients hand us in January is almost always missing a third of what we need. The return only gets filed once, and it gets filed correctly when the source documents are complete on day one. A missing form means an amended return later, and an amended return costs more and takes longer than getting it right the first time.

Start with wage and income reporting. Employers issue Form W-2 by January 31, and the IRS explains the form at about Form W-2. If you held more than one job, you’ll have more than one W-2, and both feed the same Form 1040. Independent contractors and freelancers get Form 1099-NEC for nonemployee compensation of 2,000 dollars or more, also due to you by January 31, with the IRS detail at about Form 1099-NEC. Then there’s the 1099 family for everything else: 1099-INT for bank interest, 1099-DIV for dividends, 1099-B for brokerage sales, 1099-R for retirement distributions, 1099-G for state refunds and unemployment, and SSA-1099 for Social Security. Brokerage consolidated 1099 packages frequently arrive late, often mid-February, and some get corrected in March, so don’t file the moment your W-2 shows up if you have a taxable investment account. We tell investment clients to wait for the corrected package rather than file early and amend.

On the deduction side, gather mortgage interest on Form 1098, property tax bills, charitable acknowledgment letters, medical expense totals, records of state and local taxes paid, and any closing statement from a home you bought or sold. The 2026 standard deduction is 16,100 dollars for single filers, 32,200 dollars for married filing jointly, and 24,150 dollars for head of household. You only itemize if your combined deductions beat that floor. The SALT cap sits at 40,400 dollars for 2026, so high property tax and state income tax filers in New York City should total those amounts before deciding. Self employed clients add a separate stack: business income records, expense receipts, mileage logs, and a profit and loss summary, because Schedule C drives both income tax and the 15.3 percent self employment tax.

Here’s a worked example. A married couple in Brooklyn has 19,000 dollars of mortgage interest, 14,000 dollars of property tax, 11,000 dollars of state income tax, and 6,000 dollars of charitable gifts. Their SALT is capped at 40,400 dollars but their actual state and local total is 25,000 dollars, so it isn’t limited. Add 19,000 plus 25,000 plus 6,000 and they have 50,000 dollars of itemized deductions against a 32,200 dollar standard deduction. Itemizing saves them tax on the 17,800 dollar difference, which at a 24 percent marginal rate is roughly 4,272 dollars. Without the property tax bill and the charity letters in hand, we’d have defaulted them to the standard deduction and overpaid by that amount.

We see this every year: a client forgets the basis information for a stock sale, and the 1099-B reports gross proceeds with no cost shown. The IRS then assumes a zero basis and the matching notice arrives months later. Keep your purchase confirmations or the broker’s supplemental basis statement. Another regular gap is the K-1 from a partnership, S corporation, or trust, which often arrives in March after you think you’re done gathering. One edge case worth flagging is the new contractor who got paid through a payment app. Form 1099-K may report those gross receipts, and that amount can overlap with a 1099-NEC, so reconcile the two before reporting income twice. If you want help building a clean document checklist tailored to your situation, start a new client inquiry and we’ll walk you through our individual tax returns process from the first document to the filed return.Bring it all to one folder and label each item by tax year, because the worst January is the one spent hunting for a single missing statement while the clock runs. A tidy folder in December is the cheapest tax planning you will ever do, and it shortens our work on your return too.

The deadlines that actually move your tax bill cluster in the last weeks of December and the first weeks of January, and most of them are unforgiving once they pass. The year end information you most need is a calendar, because a deduction taken one day late counts for the wrong year or not at all. Money has a date stamp for tax purposes, and that date stamp decides which return the deduction or income belongs to.

December 31 is the hard wall for almost everything that affects the current return. Charitable gifts must be completed by that date, meaning the check is mailed or the credit card is charged, not merely pledged. A stock donation must leave your brokerage account before the close of business on the last trading day, and brokers need lead time, so start the transfer in early December rather than the 30th. Tax loss harvesting sales must settle in the current year. If you’re 73 or older, your required minimum distribution from a traditional IRA or 401(k) must be taken by December 31, and the penalty for missing it is 25 percent of the shortfall under current law, reduced to 10 percent if corrected promptly. Roth conversions also close on December 31 for the year you want the income recognized, with no do-over once the calendar turns.

January 15 is the due date for the fourth quarter estimated payment on Form 1040-ES, and the IRS describes the form at about Form 1040-ES with broader rules at estimated taxes guidance. This matters for the self employed, retirees with no withholding, and anyone with large investment income. The self employment tax rate is 15.3 percent, so a contractor netting 90,000 dollars owes roughly 12,717 dollars in SE tax alone before income tax, and a chunk of that should have been paid in quarterly. Retirement plan deadlines split in two: 401(k) employee deferrals had to be withheld from a paycheck dated by December 31, but you can fund a traditional or Roth IRA for the prior year all the way to the April filing deadline. The 2026 401(k) limit is 24,500 dollars plus an 8,000 dollar catch-up, and the IRS posts current figures at 401(k) contribution limits. IRA limits are 7,500 dollars, or 8,000 dollars with the catch-up. The SEP and solo 401(k) employer contributions for the self employed can wait until the return is filed, which gives business owners a rare late lever to pull.

Worked example: a 74 year old retiree with a 600,000 dollar IRA and a roughly 4 percent RMD divisor owes about a 24,000 dollar distribution. She takes it December 28, leaving days to spare. Had she waited to January, the income lands in the wrong year and she risks the excise tax on the missed amount. If she also wanted to give to charity, routing part of that distribution straight to a qualified charity as a qualified charitable distribution would satisfy the RMD without adding to her taxable income. Timing is everything here, and the order you do things in changes the tax.

We see this every year: someone makes a January charitable gift believing it counts for the year that just closed. It doesn’t. The deduction follows the calendar date the money leaves your hands. One edge case is the HSA, where 2026 limits are 4,400 dollars for self only and 8,750 dollars for family coverage, and like an IRA you can contribute for the prior year up to the April deadline. Another is the December bonus, which your employer may pay in early January, shifting the wages and withholding into the next tax year whether you wanted that or not. If your withholding and estimates feel off heading into year end, our tax strategy consulting team can run a projection so January 15 doesn’t surprise you.We would rather spend an hour in November mapping these dates than fix a missed RMD in February, when the only options left are paperwork and an excise tax abatement request. Put the December 31 items and the January 15 payment on your calendar now, and treat them as fixed appointments you cannot reschedule.

The most reliable last minute moves are loss harvesting, bunching deductions, accelerating or deferring income, and a well sized Roth conversion. Each one has to be executed before December 31 to count for the current year, and each one rewards planning over panic. The clients who save the most are the ones who model these in November, not the ones who call us on December 29 hoping for magic.

Tax loss harvesting means selling investments that are underwater to bank capital losses. Those losses offset capital gains dollar for dollar, and up to 3,000 dollars of net loss offsets ordinary income, with the rest carrying forward indefinitely to future years. Watch the wash sale rule: if you buy the same or a substantially identical security within 30 days before or after the sale, the loss is disallowed and added to the basis of the replacement shares. We see this every year when a client sells an index fund for the loss and rebuys the identical fund a week later, erasing the benefit. Use a similar but not identical fund to stay invested without tripping the rule, then swap back after the 30 day window if you want the original holding.

Bunching deductions works when your itemized total hovers near the standard deduction. With the 2026 standard deduction at 32,200 dollars for joint filers, a couple who normally gives 8,000 dollars to charity each year might give 16,000 dollars in December and nothing the next January, pushing one year over the threshold to itemize and taking the standard deduction the off year. A donor advised fund is the clean way to do this: you deduct the full gift now and grant it out to charities over time. Proper acknowledgment letters are required for any gift of 250 dollars or more, and a gift of appreciated stock held more than a year deducts at full fair market value while skipping the capital gain entirely, a double benefit most people miss.

Roth conversions move money from a traditional IRA to a Roth, paying tax now at a known rate to avoid tax later. The sweet spot is a low income year, maybe early retirement before Social Security and RMDs begin. Worked example: a couple with 70,000 dollars of taxable income has room before the next bracket rises. Converting 25,000 dollars fills that band at a moderate rate, and that 25,000 dollars grows tax free forever and never triggers a future RMD. A conversion generates a 1099-R, part of the same 1099 series the IRS documents at about Form 1099-NEC, so plan for that paperwork. The cost is paying the tax from outside funds rather than from the IRA itself, which preserves the full balance inside the Roth.

One edge case: accelerating a state estimated tax payment into December used to be a reliable bunching move, but the 40,400 dollar SALT cap limits how much state and local tax you can actually deduct, so prepaying beyond the cap buys nothing. Another is the qualified charitable distribution, where someone 70 and a half or older sends up to 111,000 dollars in 2026 directly from an IRA to charity, satisfying the RMD without the income ever hitting the return. A third is deferring a year end invoice if you’re a cash basis business expecting a lower bracket next year, though that only helps if next year really is lower. Run the numbers before acting. Our tax strategy consulting group models these against your actual brackets, and the IRS estimated payment rules at about Form 1040-ES tell you whether a December move changes what you owe January 15.The point of every one of these moves is to control the timing and the rate at which income gets taxed, not to chase a deduction for its own sake. A move that saves a dollar of tax this year but costs two next year is a bad trade, so we always look at the two year picture before pulling any lever.

January 31 is the date that matters for both forms. Employers must furnish Form W-2 to employees and file copies with the Social Security Administration by January 31, and businesses must send Form 1099-NEC to contractors and file with the IRS by that same date. There’s no longer a later paper filing window for these two, so the old habit of mailing W-2s in February no longer works. Miss the date and the penalties start accruing per form, which is why we push clients to close their books in early January rather than waiting.

The W-2 reports wages, withholding, Social Security and Medicare wages, and retirement plan codes. The 2026 Social Security wage base is 184,500 dollars, so wages above that stop accruing the 6.2 percent Social Security portion while the 1.45 percent Medicare portion continues without limit, plus the additional 0.9 percent Medicare surtax on high earners. The IRS describes filing requirements at about Form W-2. If you run payroll, reconcile your four quarterly Forms 941 against the annual W-2 totals before you transmit, because the SSA matches them and a mismatch generates a notice you’ll spend hours unwinding. Box 12 codes for 401(k) deferrals should not exceed the 24,500 dollar limit plus the 8,000 dollar catch-up for employees 50 and older, and the IRS posts those figures at 401(k) contribution limits. An excess deferral that isn’t corrected by the deadline gets taxed twice, once going in and once coming out.

Form 1099-NEC reports nonemployee compensation of 600 dollars or more paid to independent contractors, attorneys, and other unincorporated vendors during the year. The IRS detail lives at about Form 1099-NEC. You need a signed Form W-9 from every contractor before you pay them so you have the correct legal name and taxpayer ID. The other 1099 forms, like 1099-MISC for rents and 1099-INT for interest, generally carry a later filing date than the 1099-NEC, but furnishing to the recipient still lands at January 31 for most. Payments to a corporation are generally exempt from 1099-NEC reporting, with attorneys being the notable exception, so the W-9 tells you the entity type and whether a form is even required.

Worked example: a small architecture firm in Manhattan pays three contractors 40,000 dollars, 9,000 dollars, and 450 dollars during the year. The first two each get a 1099-NEC. The 450 dollar contractor falls under the 600 dollar threshold, so no form is required, though the firm still deducts the expense on its return. The penalty for a late 1099 runs from 60 dollars to 340 dollars per form depending on how late you file, and intentional disregard pushes it to 680 dollars or more per form with no cap. Across a roster of twenty contractors, a January scramble can turn into several thousand dollars of avoidable penalties.

We see this every year: a business pays a contractor by check all year, never collects a W-9, and scrambles in January for a tax ID the contractor won’t return. Collect the W-9 up front, before the first payment clears. One edge case is the contractor paid through a third party network or card, where the payment processor issues a 1099-K and you do not issue a 1099-NEC for those specific amounts, avoiding double reporting. Another is the worker you treated as a contractor who the state later reclassifies as an employee, which is a payroll tax problem far larger than a late form. If your filings are getting complex, our tax compliance service handles the W-2 and 1099 cycle end to end, and you can reach us through a new client inquiry.We will set up your W-9 collection, reconcile your payroll to the W-2s, and transmit everything before the January 31 wall so you are never the business explaining a late filing to the IRS. Getting the contractor paperwork right in advance is what turns a stressful January into a quiet one.

Every filing season brings inflation adjusted numbers and, lately, structural changes from recent tax law, so the figures you used last year are almost never the ones you use now. Planning for the new season means starting from the current brackets, deduction amounts, and contribution limits rather than the prior ones. The single most common planning error we fix is a client running this year’s decisions on last year’s numbers.

For 2026 the standard deduction rose to 16,100 dollars single, 32,200 dollars married filing jointly, and 24,150 dollars head of household. The SALT deduction cap moved to 40,400 dollars, a real shift for New York City filers who carry heavy property and state income tax, and it changes the itemize versus standard math for a lot of households who were stuck at the old cap. Retirement limits climbed: 401(k) elective deferrals reach 24,500 dollars with an 8,000 dollar catch-up, and IRAs sit at 7,500 dollars or 8,000 dollars with the catch-up, both confirmed at 401(k) contribution limits. HSA limits are 4,300 dollars self only and 8,550 dollars family. The Social Security wage base is 184,500 dollars, and the estate and gift exemption is roughly 15,000,000 dollars per person, which matters for high net worth gifting before year end.

Withholding deserves a fresh look every January. If you got a large refund, you lent the government money interest free, and if you owed a lot, you may face an underpayment penalty. The safe harbor is paying in at least 90 percent of the current year tax or 100 percent of last year’s, rising to 110 percent if your prior year adjusted gross income topped 150,000 dollars. The self employed reset their quarterly estimates here, and the IRS form for that is at about Form 1040-ES, with the underlying estimated taxes guidance explaining the calculation. The SE tax rate holds at 15.3 percent on net self employment earnings, half of which is deductible against income tax. A quick Form W-4 adjustment with your employer in January is the easiest way to fix a withholding gap before it compounds across the year.

Worked example: a freelancer earned 80,000 dollars net this year, up from 50,000 dollars last year. Basing estimates on last year’s lower number, she paid in 100 percent of the prior tax and met the safe harbor, avoiding a penalty even though she owes a balance in April. Next year she should raise her quarterly payments so the April balance doesn’t strain cash flow, because the safe harbor protects her from penalties but not from the bill itself. Resetting estimates to current income is the move most people skip, and it’s the difference between a manageable April and a painful one.

We see this every year: a client carries forward last year’s standard deduction or contribution figure and underfunds a retirement account, leaving a deduction on the table that they can never get back once the year closes. Pull the current numbers first. One edge case is a major life change, marriage, a new child, a home sale, or a move out of New York, each of which can swing your bracket and your withholding for the whole year and may change your filing status entirely. Another is a year with unusually high income, where bunching deductions or deferring a Roth conversion to a leaner year can matter a lot. If you want a January projection that bakes in the new figures, our tax strategy consulting team builds one, and our individual tax returns service files the return when the season opens.The clients who plan in January instead of reacting in April keep more of their money and face fewer surprises, because every meaningful lever closes before the year ends. Start the new season by pulling the current figures, checking your withholding, and deciding what to do while you still have time to act on it. A short planning call in the first weeks of the year almost always pays for itself many times over by April, and it lets you walk into the season knowing roughly what you will owe.