Midyear Tax Planning Checklist: 7 Key Items to Review

By Don Morrow, CPA | Founder of Donald E. Morrow, CPA & Associates

Tax planning works best when there is still time to make decisions. By the time your tax documents arrive and your return is being prepared, many planning opportunities may already be limited.

That is why a midyear tax review can be so valuable. It gives you a chance to look at what has changed so far this year, including income, withholding, estimated payments, business expenses, retirement contributions, and major life events. For business owners, real estate owners, self-employed professionals, and families with changing financial situations, a little planning now can help prevent a stressful surprise later.

In our office, we often see clients who are surprised by how much can still be adjusted in the middle of the year. In many midyear reviews, we start with three things: the prior-year return, current-year income or bookkeeping reports, and a list of major changes since January.

Our tax planning and preparation services are designed to help clients look ahead, understand their options, and make informed decisions before year-end. This checklist is not a substitute for personalized tax advice, but it can help you start the right conversation with your CPA or EA while there is still time to act.

Use this midyear tax planning checklist before year-end:

1. Review What Changed Since Last Year

Start with a simple question: Is this year financially different from last year?

For many taxpayers, the answer is yes. You may have changed jobs, started a business, sold property, added rental income, received stock compensation, gotten married, had a child, retired, or moved. Business owners may have higher revenue, new employees, new equipment purchases, or different profit margins.

These changes matter because your prior-year return may no longer be a reliable guide. A tax projection can help estimate where you stand now, not where you stood last April.

This is especially important if your income varies during the year. The IRS notes that taxpayers figuring estimated tax should consider expected adjusted gross income, taxable income, taxes, deductions, and credits for the year, using the prior year as a starting point but adjusting for current-year changes.

2. Check Your Withholding or Estimated Tax Payments

One of the most common tax surprises is owing more than expected because not enough was paid in during the year. A good midyear question to ask is: Have you paid in enough so far, or are you heading toward an unexpected balance due?

If you receive wages or pension income, review your federal withholding. The IRS Tax Withholding Estimator can help taxpayers estimate the correct amount to withhold and may help avoid having too little or too much withheld.

If you are self-employed, a partner, an S corporation shareholder, or someone with income that is not subject to withholding, estimated tax payments may be part of your planning. The IRS generally expects tax to be paid throughout the year, either through withholding or estimated payments. Underpayment penalties may apply when taxpayers do not pay enough by the applicable due dates.

For example, a self-employed taxpayer who has a stronger-than-expected first half of the year may need to increase estimated tax payments before year-end. On the other hand, someone whose income has dropped may want to review whether they are overpaying. Either way, the goal is to avoid surprises when the return is prepared.

A midyear review gives you time to adjust before the final quarter.

3. Organize Records Before Deductions Get Missed

Good records are not just for tax filing. They help you make better business decisions and support the numbers reported on your return. Ask yourself: If you had to support this year’s deductions today, would your records be complete enough?

For small business owners, the IRS says good records help monitor business progress, prepare financial statements, identify income, track deductible expenses, track basis in property, prepare tax returns, and support items reported on tax returns.

At midyear, review whether your bookkeeping is current. Are expenses categorized correctly? Are business and personal accounts separate? Do you have documentation for mileage, meals, travel, equipment, charitable giving, and home-office expenses where applicable?

For example, if you use your vehicle for business, waiting until tax season to recreate mileage can be frustrating and less reliable. The same is true for meals, travel, charitable contributions, and home-office expenses. A midyear record review can help identify missing documentation while it is still fresh.

The goal is not to create paperwork for its own sake. The goal is to make sure legitimate deductions are not lost because records were incomplete or reconstructed months later.

4. Revisit Retirement Contributions

Retirement planning and tax planning often overlap. Depending on your situation, contributions to retirement accounts may help reduce current taxable income while supporting long-term savings. This is also a good time to ask: Are you taking advantage of the retirement contribution options available to you before year-end deadlines arrive?

For 2026, the IRS announced that the employee contribution limit for 401(k), 403(b), most governmental 457 plans, and the federal Thrift Savings Plan increased to $24,500. The IRA contribution limit increased to $7,500, with a $1,100 catch-up contribution limit for individuals age 50 and older. Additional catch-up rules may apply to certain workplace retirement plans, so taxpayers should review their options with their plan administrator and tax advisor.

Business owners may have additional planning options depending on entity structure, payroll, cash flow, employees, and plan type. These decisions should be reviewed before year-end, because some plans and contributions have specific timing requirements.

5. Plan for Major Purchases, Sales, and Income Events

Large transactions can change your tax picture quickly.

Examples include selling rental property, buying equipment, receiving a bonus, exercising stock options, converting retirement funds, selling investments, buying or selling a business, or taking a large distribution. ‍

The tax result can depend on timing, holding period, basis, depreciation history, entity structure, and whether the income is ordinary income or capital gain. For real estate owners, the details can be especially important because rental activity, depreciation, passive activity rules, and property sales often require more planning than a simple income-and-expense summary.

Before making a major transaction, talk with your CPA or EA about the tax impact. The right question is not just “Will I owe tax?” It is “What choices do I still have before the transaction happens?”

6. Look at Your Business Structure and Owner Compensation

For business owners, midyear is a good time to ask whether your current structure still fits. The question is not only whether your current structure worked in the past, but whether it still fits the way your business operates today.

A sole proprietorship, partnership, LLC, S corporation, or C corporation can each create different tax and compliance considerations. The best structure depends on facts such as income level, payroll needs, liability concerns, ownership, state tax issues, retirement planning, and long-term exit goals.

This is also a good time to review owner compensation, distributions, payroll tax obligations, bookkeeping, and whether estimated payments are keeping pace with profit. If your business has grown or changed significantly, your tax approach may need to change with it.

7. Schedule a Tax Planning Check-In Before the Year Closes

The best tax planning conversations happen before December 31. Waiting until filing season often turns planning into explanation: what happened, what you owe, and what cannot be changed. A simple question can help frame the conversation: What can still be adjusted before the year closes?

For many of our clients, the most valuable tax conversation is not the one we have in March or April when it’s time to file last year’s taxes; it is the one we have before the year is over.

A midyear or fall planning session can help identify practical next steps while there is still time to act. That may include adjusting withholding, recalculating estimated tax payments, reviewing retirement contributions, organizing records, evaluating business expenses, or planning around a major transaction.

At Donald E. Morrow & Associates, our team works with individuals, real estate owners, self-employed professionals, and businesses on tax preparation and planning. Our goal is to help clients understand their tax situation, stay compliant, and make informed decisions throughout the year.

Conclusion

Tax planning does not have to be overwhelming. Start with what changed, review your payments, organize your records, revisit retirement contributions, and ask questions before major financial decisions are finalized. ‍

The earlier you review your tax picture, the more options you may have.

Ready to review your tax situation before year-end?

‍ ‍Schedule a Tax Planning Consultation‍ ‍

About Donald E. Morrow & Associates

Donald E. Morrow & Associates is a Colorado-based tax firm serving individuals, real estate owners, self-employed professionals, and businesses with tax planning, preparation, and compliance services. Led by experienced CPAs and enrolled agents, the firm focuses on helping clients navigate tax decisions with clarity, accuracy, and confidence.