Most business owners treat the tax year like a test that gets graded in April. The IRS sees it differently. The year itself is the test, December 31 is the bell, and your return is the clean copy you hand in afterward. Once the bell rings, you can neatly copy your answers, but you cannot change them.
That is why tax compliance is not a once-a-year event. Employers, banks, brokers, and payment platforms report to the IRS throughout the year. Estimated payments come due every quarter. After you file, automated systems compare your return against what others reported. Notices can arrive months later, each one with its own response window. Filing is one step in a cycle that never fully stops.
The decisions that shape your return fall into two groups. Some close on December 31. Others stay open until you file. Knowing which is the difference between planning your year and simply reporting it.
Why December 31 Matters More Than April 15
A tax return reports on a year that is already over. By the time most people gather their documents in February, their wages, distributions, investment sales, and business purchases are fixed. A good preparer reports those facts accurately. No preparer can go back and change them.
This is where many taxpayers lose ground without realizing it. They assume their preparer will find savings at filing time, so they wait. Many of the most valuable decisions require something to happen inside the calendar year, and once January 1 arrives, those decisions are no longer available.
Tax problems are easier to manage before the IRS process controls the timeline. If you want a practical review of what is still open for you this year, speak with Steve Perry, EA. Call 678-717-9818, email steve@bookstaxesatl.com, or connect on LinkedIn at www.linkedin.com/in/steveperrybtm.
Why the Margin for Fixing It Later Has Narrowed
In the past, much of what happened during the year reached the IRS only through the taxpayer’s own return. That is no longer true. The IRS receives information returns such as Forms W-2, 1098, and 1099 from third parties and uses an automated system to compare those amounts against what you report. When the figures do not match, the system flags the return for review and may issue a proposed adjustment. [IRS]
Information reporting has also widened. Payment platforms report on Form 1099-K when a payee exceeds $20,000 and 200 transactions. Brokers now report digital asset sales on Form 1099-DA. [IRS] Brokerage statements report cost basis. Retirement plan custodians report distributions.
The practical effect is simple. Much of your year is already on record with the IRS before you file. Your return has to agree with that record. The time to shape the facts is while the year is still open, not after third parties have already reported them.
Decisions That Generally Close on December 31
These are the decisions that most often lock when the year ends:
- Workplace retirement deferrals. Contributions to a 401(k) come out of your paycheck, so they must run through payroll before year end. For 2026 the employee limit is $24,500, plus an $8,000 catch up at age 50 and older, or $11,250 for those age 60 through 63. [IRS]
- Required minimum distributions. After the first year, each annual RMD must be taken by December 31. A shortfall can trigger a 25% excise tax, reduced to 10% if corrected within two years. [IRS]
- Charitable gifts. A gift counts in the year it is completed, not the year it is promised.
- Equipment purchases. The deduction follows the date the equipment is placed in service, not the date you sign the order.
- Investment sales. A sale to recognize a gain or harvest a loss must happen inside the year you want it reported.
There may be other items depending on the facts and circumstances. What these decisions share is that each depends on something happening, not on a form being filed.
A Worked Equipment Purchase Example
Consider a contractor who has a strong year. In early December, she decides to buy a $180,000 piece of equipment she has needed for some time. She signs the purchase agreement on December 12 and pays the deposit.
For 2026, qualifying equipment acquired and placed in service after January 19, 2025, is eligible for 100% bonus depreciation, and the Section 179 expensing limit is $2,560,000. [IRS] On paper, she can deduct the full cost this year.
The key words are placed in service. That generally means the equipment is ready and available for its intended use in her business. If the dealer delivers on December 28 and her crew can use it, the deduction belongs to 2026. If delivery slips to January 8, the deduction moves to 2027, even though she signed and paid in December.
Same contractor, same equipment, same check. A ten-day delivery delay moves a $180,000 deduction into a different tax year. The tax law did not change. The timing did.
There is a second lesson. Buying equipment only to cut taxes spends a full dollar to save a fraction of one. The purchase should make business sense first. The timing should then be managed so the deduction lands where it does the most good.
Before assuming your tax position is settled for the year, consider having Steve Perry, EA evaluate your records, planned purchases, and timing so your decisions land in the year you intend. Call 678-717-9818, email steve@bookstaxesatl.com, or connect on LinkedIn at www.linkedin.com/in/steveperrybtm.
Decisions That Stay Open Until You File
Some decisions give you more time, which is useful as long as you know it is there:
- IRA contributions. Contributions for 2026 can generally be made until April 15, 2027, as long as they are designated for 2026. [IRS]
- HSA contributions. If you were eligible, 2026 HSA contributions can also be made through April 15, 2027. [IRS]
- SEP plans. A SEP can be set up and funded as late as the due date of your return, including extensions. [IRS]
There may be other items depending on the facts and circumstances. These open items work best as fine tuning once your numbers are final. They do not replace decisions that had to be made in December.
How Waiting Narrows Your Options
The IRS process works in sequence, and each stage leaves fewer choices than the one before.
Before December 31, you control the facts. You can adjust deferrals, time purchases, take distributions, and decide when to give. After December 31, you are limited to the short list of decisions that stay open until filing. After you file, the matching system compares your return against third party records. If something does not match, the IRS may send a CP2000 notice proposing changes, generally with 30 days from the notice date to respond. If you do not respond, the IRS sends a Statutory Notice of Deficiency. [IRS]
Each stage is predictable. The taxpayers who end up in the later stages are rarely the ones who made a single large mistake. They are more often the ones who waited, missed a window, or set aside a letter.
Year-end decisions also feed into the fourth quarter estimated payment due January 15. A larger deferral, an equipment purchase, or a realized loss can change what you owe, and that change belongs in the January payment rather than in a surprise at filing.
If unanswered notices, unpaid balances, missing records, or planning gaps are already part of your picture, speak with Steve Perry, EA before the next stage of the process narrows your choices. Call 678-717-9818, email steve@bookstaxesatl.com, or connect on LinkedIn at www.linkedin.com/in/steveperrybtm.
Two Assumptions Worth Retiring
The first is that tax risk ends when the return is filed. Filing starts the matching process. Your return is compared against third party records after it is accepted, which is why many notices arrive well after the filing season ends.
The second is that nothing meaningful can be done until next year. October through December is when the most can still be done. Payroll can be adjusted, distributions can be taken, purchases can be timed, and estimates can be recalculated. After January 1, most of that becomes history.
The Bottom Line
April 15 is when you report the year. December 31 is when you finish shaping it. Tax planning and IRS risk management continue all year, because the IRS receives information all year and reviews it long after you file.
Many IRS issues do not come from filing mistakes alone. They come from what taxpayers fail to do after the return is filed, after a notice arrives, or after a planning opportunity becomes visible and then passes.
Good tax outcomes come from managing the year before the IRS forces the issue. To review which of your 2026 decisions are still open before the window closes, speak with Steve Perry, EA. Call 678-717-9818, email steve@bookstaxesatl.com, or connect on LinkedIn at www.linkedin.com/in/steveperrybtm.
Frequently Asked Questions
Can I still make a 2026 IRA contribution after December 31?
Generally yes. Contributions for 2026 can usually be made until April 15, 2027, as long as they are designated for 2026.
Can I catch up on 401(k) contributions when I file?
No. Employee deferrals come out of your pay, so they must be withheld through payroll during the year.
If I sign for equipment in December, do I get the deduction this year?
Only if the equipment is placed in service by December 31. Signing or paying alone is generally not enough.
Does the IRS already know about my income before I file?
In many cases, yes. Employers, banks, brokers, and payment platforms report to the IRS, and your return is compared against those reports.
When is the best time to start year end planning?
October and November give the most room to act, because payroll providers, dealers, and custodians often need time to process changes before the year closes.
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