Your Year-End Tax Checklist: What to Review Before December 31

TLDR: Year-end is the best time to review your finances, make strategic tax moves, and get organized before deadlines hit. Businesses and individuals can reduce stress–and potentially save money–by reviewing income, expenses, deductions, retirement contributions, and required documentation now. A clear checklist ensures you enter the new year prepared and confident.

Key Takeaways:

Proactive planning pays off. Reviewing financial statements, contributions, and documentation before the new year helps you avoid filing delays and missed opportunities.
Businesses benefit from strategic timing. Equipment purchases, payroll adjustments, and retirement contributions made before year-end can influence your tax position.
Individuals should organize early. Tracking withholding, maximizing retirement savings, and organizing tax documents now makes tax season smoother and more predictable.
Documentation is everything. Both individuals and businesses save time, and reduce errors, by gathering receipts, statements, and records ahead of filing

As the year winds down, it’s the perfect time to pause, review your financial picture, and make smart, proactive moves before December 31. Whether you’re a business owner or an individual taxpayer, thoughtful planning now can reduce stress later and potentially reduce your tax liability.

To help you navigate the process, Donovan CPAs has pulled together a practical year end tax planning checklist you can use as your starting point.

Think of this as a guide to what matters most as you prepare for the upcoming tax cycle.

Year-End Tax Checklist for Businesses

Strong year-end planning helps business owners avoid surprises at filing time and gives you a clearer view of where you’re headed next year.

Use this section to support your end of year tax planning and finish 2025 with clarity.

Review Your Financial Statements

Compare actual performance to budget.
Confirm that income and expenses are recorded correctly.
Ensure all bank accounts and credit card accounts are fully reconciled through year-end.
Check for outstanding receivables and consider collecting overdue accounts.

Evaluate Tax-Deductible Purchases

Consider whether strategic equipment purchases, technology upgrades, or repairs should be completed before the year closes.
Discuss Section 179 or bonus depreciation opportunities with your CPA.

Reconcile Payroll and Contractor Payments

Ensure proper reporting for W-2 employees and 1099 contractors.
Verify payroll tax accuracy and confirm end-of-year bonuses are correctly scheduled.
Review how overtime and tip information is being tracked. While reporting is not currently required, the IRS encourages employers to maintain this data for employees. With new rules on the horizon, this is a good time to review your approach and ask questions.

Assess Your Estimated Tax Payments

If profits were higher or lower than projected, adjust your fourth-quarter payment.
Plan ahead to avoid potential underpayment penalties by reviewing your estimated tax strategy now.

Review Owner Compensation, Distributions, and Capital Accounts

Confirm salaries or guaranteed payments align with IRS guidance.
Check shareholder basis, partner capital accounts, and distribution impacts.

Maximize Retirement Plan Contributions

Evaluate contributions for yourself and employees.
Consider whether adding or modifying a plan (SEP, SIMPLE, 401(k), or defined benefit) could help reduce taxable income.

Revisit Your Accounting Method

If your business has grown or changed, it may be time to evaluate whether the cash or accrual method is more advantageous.
Review any opportunities related to inventory methods, write-offs, or timing of revenue and expenses.

Prepare Year-End Documentation

Gather receipts, invoices, depreciation schedules, loan documents, and bank reconciliations.
Organize anything your accountant will need so you know how to get ready for tax season before the rush begins.

Year-End Tax Checklist for Individuals

Even if your financial life feels simple, a few strategic steps now can make getting ready for tax season much smoother and potentially more beneficial.

Max Out Your Retirement Contributions

Review 401(k), IRA, or Roth IRA contribution limits.
If you’re close to a tax bracket threshold, contributions may reduce taxable income.

Evaluate Capital Gains and Losses

Review your investment portfolio for opportunities to harvest losses.
Discuss timing strategies with your advisor to avoid wash sale issues.

Confirm Withholding Accuracy

If you had a major life change (marriage, divorce, job change, or a new dependent) review your W-4 to ensure proper withholding.

Track Charitable Contributions

Gather donation receipts, including cash and non-cash contributions.
If you’re close to itemizing, consider bunching contributions into the current year.
Due to tax law changes effective January 1, 2026, consider accelerating planned 2026 charitable contributions into the 2025 tax year.

Review Flexible Spending & HSA Accounts

Use FSA funds before the plan’s deadline so you don’t lose them.
Consider contributing more to an HSA if eligible.

Organize Your Tax Documents

Start a digital or physical folder for W-2s, 1099s, mortgage statements, childcare or education expenses, and medical receipts.
If you made large purchases, improvements, or donations, ensure you have proper documentation.

Address Life Changes That Affect Your Taxes

Note changes in dependents, marital status, or homeownership.
Update estate planning documents or beneficiaries if needed.

Donovan CPAs Can Help

Whether you’re a business leader or an individual taxpayer, the right strategy now can help you enter the new year with confidence. Our team works alongside clients to simplify complex decisions, reduce uncertainty, and create a smooth path from planning to filing.

If you’d like personalized, supportive guidance with year-end preparation, let’s talk! We’re here to help you make informed decisions and finish the year well.

Ready to get a clearer plan in place? Reach out to our team.

FAQs

Why is year-end planning so important?

Many tax-saving opportunities disappear once the calendar year ends. Reviewing your financial picture now allows you to maximize deductions, verify accuracy, and avoid stressful surprises during tax season.

What documents should I start gathering?

Businesses should gather financial statements, payroll reports, purchase receipts, loan documents, and prior-year returns. Individuals should collect W-2s, 1099s, charitable receipts, mortgage documents, medical receipts, and investment statements.

Does everyone need to make estimated payments?

Not always. Individuals with multiple income sources (freelancing, investments, rental income) and most business owners need to review estimated tax obligations. Your CPA can help assess whether payments are required and how much to remit.

What if I know I’ll owe but can’t pay right away?

The IRS offers payment plans and options for taxpayers who can’t pay in full. Planning early gives you more flexibility and helps reduce penalties.

Can Donovan CPAs review my current tax strategy?

Yes. Our team regularly helps clients across industries and needs assess their tax position, identify planning opportunities, and prepare for the new year with confidence. We’re here to help.