The 2026 Tax season might feel far away, but getting organized now can save you serious stress, and money. Today we are discussing five essential steps you should take before the 2026 tax season so you can file smoothly, avoid surprises, and stay ahead of the IRS.
1. Organize Your Finances Early
If you own a business, you need to start organizing and tax planning now. Don’t wait until February or March because you will forget things. Organizing throughout the year (or at least starting now) helps avoid paying taxes on income you shouldn’t be taxed on.
For Example: If you earned $20,000 in a photography business, you may have some deductible expenses that you might not have thought of like:
- Mileage usage on your personal vehicle
- Equipment purchases
- Home office expenses
- Insurance, electric, business supplies, etc.
If you don’t organize these ahead of time, you may end up paying taxes on the entire amount instead of the reduced figure after expenses.
You can stay organized using:
- Spreadsheets
- QuickBooks
- Manual logs
Now for our W-2 earners
2. Maximize Your Retirement Contributions
As a W-2 employee, you can contribute up to $23,000 to your 401(k). If you are a business owner who pays yourself through payroll, you can also contribute up to this amount.
Increasing your contribution now will reduce your taxes at the end of the year. Yes, it may lower your paycheck slightly, but keep in mind:
- Most 401(k)s allow you to borrow against your contributions.
- You pay yourself back with interest, growing your account.
- This is pre-tax money working for you that’s not going to the IRS.
Warning: If you borrow from your 401(k) and fail to pay it back, you may face a 10% penalty plus income tax if under age 59½.
3. Review Your Withholding for 2025
Overpaying or underpaying taxes creates problems. Overpaying gives the IRS an interest-free loan. Underpaying results in penalties and interest.
To avoid surprises:
- Review your paycheck withholding.
- Update your W-4 using the IRS Withholding Calculator.
- Consult your CPA to calculate correct withholdings.
If you’re behind on estimated tax payments, pay now. The IRS charges interest if you fail to pay on time, so don’t give them extra money voluntarily.
4. Plan Ahead for Major Life Changes
Major changes can dramatically affect your tax situation:
- Retiring
- Selling your primary home
- Selling rental property
- Marriage or divorce
- Having a child
For example:
- A rental property sale may qualify for a 1031 exchange.
- A primary home sale may qualify for up to $250,000–$500,000 in exemptions.
- Cashing out a 401(k) without planning may result in a $50,000 tax bill (yes, I’ve seen it happen!).
Talk to a CPA before making big decisions. Planning allows you to choose the right year, the right strategy to avoid massive unexpected tax bills.
5. Schedule Your Year-End Tax Session
Whether you’re a W-2 employee, a business owner, or an investor, you should meet with a tax professional before the end of the year.
You especially need a tax-session if:
- You earn over $50,000
- You own rental properties
- You have investments
- You plan to sell assets
- Your business has unpredictable income
Year-end tax planning prevents overpaying, underpaying, and stressful surprises. Remember, December is busy so be sure to schedule this meeting early.
Final Thoughts
Tax planning isn’t a once-a-year task. It’s an ongoing system that should be managed throughout the year, and not at the last minute.
Following even a few of these steps will drastically reduce stress and help you stay tax-ready. I hope you found these tips helpful!
If you have questions, be sure to call us for help.