Hi,
Most people think about taxes in April. By then it’s too late: your 2026 tax bill is largely decided by December 31, and everything after that is just paperwork. The difference between filing and planning is often thousands of dollars.
The 2025 tax law also changed several rules that apply starting this year, so a plan that worked last year may not fit anymore.
Here’s what a year-end review looks at, and every one of these has a deadline:
- Joint or separate filing – your marital status on December 31 covers the whole year, and once you file jointly you can’t switch to separate after the due date. Running both ways before year end is the only way to know which costs you less
- Retirement planning – 401(k) deferrals have to go through payroll by year end, IRA contributions can wait until the filing deadline, and a Roth conversion has to be completed by December 31 to count for 2026
- Deductions and credits – charitable gifts, medical expenses, and education and family credits only count in the year they happen, and many people never claim what they qualify for
- Business opportunities – starting a business, or turning a side income or consulting work into one, can open up deductions and retirement plans you don’t have as an employee. The structure you pick and the year you start decide which ones apply
- Financial planning – your investments, savings, and goals should work together toward where you want to be. If you need investment planning, reply to this email with the word “CFP” and we’ll schedule a free 15 minute call with our Certified Financial Planner
And depending on your situation, there’s more on the list:
- Self-employed and 1099 income – no one withholds tax from your income, so the fourth estimated payment is due January 15, and home office, vehicle, and equipment deductions have to be documented in the year they happen
- Business owners – equipment has to be placed in service by December 31 to count this year, with 100% bonus depreciation for qualifying property acquired after January 19, 2025, and your owner pay, retirement plan, and entity structure are best set before year end
- Rental income – repairs and improvements are treated differently, depreciation affects your tax when you sell, and passive loss limits can cap what you deduct, so expenses and purchases are worth planning before December 31
- Crypto – every sale, swap, or payment in crypto is a taxable event, so your gains and losses should be tallied before year end, while selling losing positions can still offset gains
- Stock and equity compensation – RSUs, stock options, and ESPPs can create income or alternative minimum tax when they vest or are exercised, the withholding on them often falls short, and the holding period on shares you sell decides whether the gain is short or long term
- Visa holders and foreigners in the US – the days you spend in the US through December 31 decide whether you’re taxed as a US resident on worldwide income, and foreign accounts may need to be reported
And here’s what happens if you wait:
- You pay more than you owe – the deductions and credits you could have created before December 31 can’t be created in April
- A surprise bill – nobody tells you what you owe until the return is prepared, and by then there’s no time to prepare for it
- Penalties – if you underpay through withholding or estimates, the IRS charges a penalty plus interest, even when you pay the full bill by April 15
- Expired options – 401(k) deferrals, charitable gifts, and Roth conversions all end with the year
The catch is that a tax return only reports what already happened, and you can’t plan for what nobody’s tracking. That’s why the best time to start planning is now, not April.
Reply to this email by Friday, and we will get your hour on the calendar. Bring your most recent tax return so we can review your actual situation and give you real answers – no generalities.
Sincerely,
—
George Dimov, CPA
Licensed and Insured
(833) 829-1120 toll free
(212) 994-8081 Fax
www.dimovtax.com