A Message From Our Team Keep More of What You Earn This Year Most year-end tax strategies must be completed by December 31, and each one depends on knowing where your business stands today. When your books are reconciled through September or October, we can project your 2026 liability, set your fourth-quarter estimate, and recommend the strategies that make sense for your situation. When they are not, our recommendations are based on last year’s return, which may not reflect this year’s results. | In This Issue 01Year-End Bookkeeping 02Estimated Taxes & Projections 03Year-End Tax Strategies 04Case Study & Key Dates Look for the gold Moceri Services panels after each section. One click to request any of them. |
01
Year-End Bookkeeping
Before Your Planning Meeting
✓ Bank, credit card and loan accounts reconciled ✓ Receivables and payables reviewed and adjusted ✓ Owner draws and shareholder loans reconciled | ✓ 2026 equipment and vehicle purchases recorded ✓ Payroll and officer compensation confirmed ✓ W-9s on file for vendors (1099 threshold is now $2,000) |
If your books are behind, our staff can complete the reconciliations and adjusting entries needed to close 2026 before your planning meeting.
Planning Point
To be depreciated in 2026, an asset must be placed in service by December 31, meaning delivered, installed and ready for use. Ordering or paying for equipment in December does not qualify on its own. In our experience, uncategorized transactions and unreconciled shareholder accounts are the most common causes of an inaccurate projection.
| |||
|
02
Estimated Taxes and Projections
For 2027, we recommend quarterly projections for business owners whose income varies from year to year.
Planning Point
To avoid a federal underpayment penalty, payments must generally equal 90% of your 2026 tax or 100% of your 2025 tax (110% if 2025 AGI exceeded $150,000). The fourth-quarter payment is due January 15, 2027. Additional W-2 withholding before year-end is treated as paid evenly throughout the year, which can help if earlier estimates were short.
| |||
|
03
Year-End Tax Strategies
Deductions & Credits Equipment: 100% bonus depreciation and Sec. 179 Research: Domestic R&D expensing and the R&D credit Real estate: cost segregation studies Repairs: de minimis and repair safe harbors Retirement: 401(k), profit sharing and cash balance plans | Timing & Methods Prepaid expenses: pay deductible items before 12/31 Income deferral: timing of year-end billings Bonuses: accrue in 2026, pay by March 15 (accrual-basis taxpayers) Write-offs: bad debts and obsolete inventory Accounting methods: cash vs. accrual, inventory | Owners & Family Michigan FTE tax: entity-level state tax deduction QBI: 20% deduction, made permanent in 2025 Basis: review before losses or distributions Investments: gain/loss harvesting, Roth conversions Family: annual gifts ($19,000 per donee), 529 plans, wages to children |
Not every strategy is appropriate for every client. Your projection will show which ones are worth pursuing.
Technical Reminders
Section 179 vs. bonus depreciationThe Sec. 179 deduction is limited to business taxable income. Bonus depreciation can create or increase a loss, but owners may deduct that loss only to the extent of their basis. | Accrued bonuses to ownersAccrued bonuses are deductible in 2026 if paid within 2½ months of year-end. Bonuses to S-corporation shareholder-employees are deductible only when paid, regardless of ownership percentage. |
Basis limitsS-corporation losses are limited to stock and direct loan basis. Distributions in excess of basis are taxed as capital gain, so basis should be confirmed before year-end distributions. | Michigan FTE electionOnce made, the election applies to the current year and the following two years. We can model the federal benefit and cash flow before recommending it. |
Prepaid expensesCash-basis taxpayers may generally deduct prepaid expenses that do not extend beyond 12 months or the end of the following tax year. Longer prepayments must be capitalized. | Reasonable compensationWages that are too low draw IRS scrutiny; wages that are too high reduce the QBI deduction and increase payroll tax. |
| |||
|
Case Study
Year-End Planning for a Manufacturing Client
A family-owned manufacturer (S corporation, approximately $4 million in revenue) contacted us in October. Its books had last been reconciled in May, and its year-end planning consisted of a safe harbor letter.
1 Bookkeeping We reconciled and closed the books through September within three weeks. | 2 Projection Income was up roughly $300,000. The safe harbor amount would have left a significant balance due in April. | 3 Margin Review Two product lines had not been repriced for material cost increases. New pricing takes effect in 2027. | 4 Tax Strategies A planned equipment purchase was placed in service in 2026 and a retirement plan was adopted. |
Q4 Estimate based on actual 2026 results | +3 points target gross margin on repriced lines | Ongoing monthly bookkeeping and quarterly planning |
This is a composite example for illustration and does not describe a specific client. Results will vary.
Key Year-End Dates
Dec. 31 Assets placed in service; deductible expenses paid; gifts and Roth conversions completed | Jan. 15 Fourth-quarter 2026 federal and Michigan estimates due | Feb. 1 W-2s and 1099-NECs due to recipients and the IRS | Mar. 15 S-corporation and partnership returns due; accrued bonuses to non-owners paid | Extended due date Last day to establish and fund a SEP or new profit-sharing plan for 2026 |
Schedule Your Year-End Planning Meeting
Please contact our office to schedule a meeting in November or early December. If your books are current, send them ahead of time and we will prepare a projection. If they are not, we can help bring them current first.