Getting ready for tax season: what to do in the fourth quarter

A smooth tax season is mostly won in October, November, and December. Returns get delayed for the same reasons every year: books that are months behind, missing W-9s, unexplained transactions, and documents that turn up in March. Here is what to get done in the fourth quarter so your returns can be filed on time, and right.

October: get the books current

• Reconcile through September. Match every bank, credit card, and loan account to its statement through the end of the third quarter.
• Clear the "uncategorized" pile. Every transaction your software could not classify needs an answer now, while you still remember what it was.
• Separate owner money. Make sure owner draws, owner contributions, and personal expenses paid by the business are recorded as such, not buried in expense accounts.
• Split loan payments. Only the interest portion of a loan payment is an expense. Use your loan statements to separate principal from interest.

November: chase the paperwork

• Collect W-9s from every vendor and contractor. For payments made in 2026, most 1099-NEC and 1099-MISC forms are required only at $2,000 or more per payee. Our article on the new 1099 threshold covers the exceptions.
• Verify employee information. Confirm names, Social Security numbers, and mailing addresses for every employee before the last payroll of the year.
• Gather asset purchases. List equipment, vehicles, and improvements bought during the year, with invoices and the date each one was placed in service.
• Finish the mileage log. Dates, miles, and business purpose for every business trip. The IRS rate was 72.5 cents per mile through June 30 and 76 cents from July 1.
• Review a year-to-date profit and loss. It shows whether estimated tax payments have kept up and whether year-end planning is worth a conversation.

December: close out the year

• Run bonuses through payroll. Year-end bonuses to employees are wages and belong on the W-2.
• S-Corporation owners: confirm you have taken a reasonable salary through payroll, and that any health insurance the company paid for you will be added to your W-2.
• Count inventory. If you carry inventory, count it as of December 31. The year-end count directly affects your cost of goods sold and your taxable profit.
• Write down your estimated payments. Note the date and amount of every federal, Pennsylvania, and local estimated payment you made during the year.
• Book your tax appointment now. January and February fill fast. Scheduling in December gets you on the calendar before the rush.

Documents to expect in January and February

• Form 1099-K from payment processors and apps, if you had more than $20,000 and more than 200 transactions
• 1099-NEC and 1099-MISC forms from businesses that paid you
• Year-end loan statements showing interest paid, including Form 1098 for mortgage interest
• 1099-INT and 1099-DIV for business and personal accounts
• Schedule K-1s from any partnership or S-Corporation you own part of, which often arrive in March

Keep a folder, paper or digital, and drop each form in as it arrives. Most delays in March come down to one missing form.

The deadlines ahead

• January 15, 2027: fourth-quarter estimated payments for 2026, federal and Pennsylvania
• February 1, 2027: W-2s to employees and the Social Security Administration, and 1099-NEC to contractors and the IRS, moved from January 31 because it falls on a Sunday
• Early February 2027: fourth-quarter payroll tax returns, including Form 941 and Pennsylvania's UC-2
• March 15, 2027: partnership (Form 1065) and S-Corporation (Form 1120-S) returns, and K-1s to owners
• April 15, 2027: personal returns (Form 1040 and PA-40), C-Corporation returns (Form 1120), and the local earned income tax return

An extension gives more time to file, not more time to pay. If you expect to owe, estimate and pay by the original deadline to limit penalties and interest.