Year-End Tax Planning Checklist: 15 Moves Before December 31
Don't miss these year-end tax planning opportunities. Complete checklist of deductions, contributions, and strategies to implement before the year closes.
December isn't just holiday season—it's your last chance to reduce this year's tax bill.
Many tax strategies have December 31 deadlines. Miss them, and you wait another year (or lose the opportunity forever for that tax year).
This checklist covers the most impactful year-end tax moves for freelancers and self-employed professionals.
Retirement Contributions
1. Fund Your Solo 401(k)
Deadline: December 31 (to establish plan); tax filing deadline (to contribute)
Action items:
- [ ] If no Solo 401(k) exists, establish by December 31
- [ ] Calculate maximum contribution (employee + employer portions)
- [ ] Decide contribution amount based on cash flow
- [ ] Consider Roth vs. traditional split
Maximum 2026: $70,000 ($77,500 if 50+)
Calculate your optimal contribution →
2. Max Out SEP IRA (If Using)
Deadline: Tax filing deadline (including extensions)
Action items:
- [ ] Calculate maximum contribution (25% of net SE income, up to $70,000)
- [ ] Decide contribution amount
- [ ] Note: Can establish and fund SEP IRA until tax deadline
3. Contribute to Traditional/Roth IRA
Deadline: April 15, 2027 (for 2026 contribution)
Action items:
- [ ] Confirm eligibility (income limits for Roth)
- [ ] Decide traditional vs. Roth based on current vs. future tax rates
- [ ] Contribute $7,000 ($8,000 if 50+)
4. Fund HSA (If Eligible)
Deadline: April 15, 2027 (for 2026 contribution)
Action items:
- [ ] Confirm you have qualifying HDHP
- [ ] Contribute maximum: $4,300 individual, $8,550 family (+ $1,000 catch-up if 55+)
- [ ] Keep receipts for future tax-free withdrawals
Business Deductions
5. Make Equipment Purchases
Deadline: December 31 (must be placed in service)
Action items:
- [ ] Review needed equipment (computer, furniture, tools)
- [ ] Purchase and receive before year-end
- [ ] Document business purpose
- [ ] Choose Section 179 immediate deduction or depreciation
Section 179 limit 2026: $1,220,000
6. Prepay January Expenses
Deadline: December 31
Action items:
- [ ] Prepay Q1 rent (if landlord allows)
- [ ] Pay annual software subscriptions
- [ ] Renew business insurance
- [ ] Stock up on supplies
Note: IRS allows prepaying up to 12 months of certain expenses.
7. Review Home Office Deduction
Deadline: December 31 (for this year's deduction)
Action items:
- [ ] Calculate simplified method ($5 × sq ft, max $1,500)
- [ ] Calculate actual method (% of home expenses)
- [ ] Choose higher deduction
- [ ] Document home office measurements
Calculate your home office deduction →
8. Complete Mileage Tracking
Deadline: December 31 (contemporaneous records required)
Action items:
- [ ] Review mileage log for completeness
- [ ] Add any missing business trips
- [ ] Calculate total business miles
- [ ] Compare standard ($0.70/mile) vs. actual expenses
Review your mileage deduction →
Income Timing
9. Defer Income (If Appropriate)
When to defer: Expecting lower income next year, near bracket threshold
Action items:
- [ ] Delay December invoicing to January
- [ ] Negotiate January payment dates for December work
- [ ] Consider installment arrangements for large projects
Caution: Don't sacrifice business relationships for modest tax savings.
10. Accelerate Income (If Appropriate)
When to accelerate: Expecting higher income next year, low current year
Action items:
- [ ] Invoice early for pending work
- [ ] Request early payment from willing clients
- [ ] Close deals before year-end
Tax Loss Harvesting
11. Harvest Investment Losses
Deadline: December 31
Action items:
- [ ] Review investment portfolio for losses
- [ ] Sell positions with unrealized losses
- [ ] Use losses to offset capital gains
- [ ] Deduct up to $3,000 against ordinary income
- [ ] Carry forward excess losses
Wash sale rule: Can't repurchase same security within 30 days.
Charitable Giving
12. Make Charitable Contributions
Deadline: December 31 (for this year's deduction)
Action items:
- [ ] Calculate if bunching makes sense (standard vs. itemized)
- [ ] Contribute cash or appreciated stock
- [ ] Consider donor-advised fund for flexibility
- [ ] Get receipts for all donations
Stock donations: Avoid capital gains while getting full FMV deduction.
13. Qualified Charitable Distributions (Age 70½+)
Deadline: December 31
Action items:
- [ ] Transfer from IRA directly to qualified charity
- [ ] Satisfies RMD without increasing taxable income
- [ ] Maximum $105,000 per year
Estimated Taxes
14. Review Q4 Estimated Payment
Deadline: January 15 (for Q4 payment)
Action items:
- [ ] Calculate total tax liability for year
- [ ] Subtract Q1-Q3 payments
- [ ] Determine Q4 payment needed
- [ ] Consider safe harbor (100%/110% of prior year)
Calculate your estimated taxes →
15. Increase W-2 Withholding (If Applicable)
Deadline: December 31 (for this year's withholding)
If you have W-2 income (part-time job, spouse's job), increasing withholding can substitute for quarterly payments.
Advantage: Withholding is treated as paid evenly throughout the year (avoiding quarterly underpayment penalties).
Action: File new W-4 to increase withholding for remaining paychecks.
Year-End Tax Planning Calendar
| Week | Actions |
|---|---|
Early December | Review income projection, calculate retirement contribution, identify equipment needs |
Mid-December | Make equipment purchases, prepay expenses, make charitable contributions |
Late December | Final income timing decisions, investment loss harvesting, year-end bookkeeping |
December 31 | Deadline for Solo 401(k) establishment, equipment in service, charitable gifts, loss harvesting |
January 1-15 | Q4 estimated payment, IRA/HSA contributions (if not done) |
Year-End Review Meeting Agenda
If working with a CPA or tax advisor, cover these topics:
1. Income projection - Final expected income for the year
2. Retirement strategy - Contribution amounts and account types
3. Entity structure - S-Corp election for next year?
4. Estimated taxes - Q4 payment amount
5. Deduction optimization - Any missed opportunities
6. Next year planning - Changes to anticipate
Frequently Asked Questions
Is it too late to establish a Solo 401(k)?
If it's before December 31, no. The plan must be established by year-end, but contributions can be made until your tax filing deadline (including extensions).
Should I accelerate income or defer it?
Compare your current year bracket to expected next year bracket. If this year's is lower, accelerate. If next year's will be lower, defer. If similar, defer for the time value of money.
What if I can't afford all these contributions?
Prioritize by ROI. Retirement contributions (especially with employer match or high bracket) typically provide the best return. Equipment purchases only make sense if you actually need the equipment.
How do I know if I should bunch charitable contributions?
Calculate your itemized deductions. If they're close to but below the standard deduction, bunching 2-3 years of giving into one year can push you over the threshold.
Don't Leave Money on the Table
Year-end tax planning is one of the highest-ROI activities for freelancers. A few hours of planning can save thousands in taxes.
AlphaTax helps you project your tax liability and identify optimization opportunities throughout the year—not just in December.
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