A Tax Preparer's Real Year-End Checklist for W-2 and 1099 Households

Tax season, for most preparers, is really a filing season — the numbers are already fixed by the time a return is being typed up in February. The work that actually changes a tax bill happens earlier, in a handful of year-end conversations that walk through a specific checklist. That checklist differs meaningfully depending on whether the income is W-2, 1099, or a mix of both, because the levers available to each household aren't the same.

The items that apply to nearly every household

• Maximizing pre-tax retirement contributions. A preparer checks year-to-date 401(k) contributions against the annual limit and flags room left before the last paycheck of the year — a W-2 employee can often increase their contribution percentage for the final pay period or two to capture a last push of pre-tax savings. For anyone with access to a traditional IRA, the contribution deadline actually runs to the following April, but confirming eligibility and phase-out limits before year-end avoids surprises.
• Tax-loss harvesting in taxable brokerage accounts. Any investment sitting at a loss can be sold before December 31 to realize that loss, which offsets realized gains dollar-for-dollar and, beyond that, up to $3,000 of ordinary income per year, with any excess carried forward. The preparer's real value here is flagging the wash sale rule — repurchasing the same or a substantially identical security within 30 days before or after the sale disallows the loss entirely, a mistake that's easy to make by accident through automatic dividend reinvestment.
• Bunching charitable donations. Since the standard deduction rose substantially in recent years, many households no longer itemize every year. A preparer often suggests "bunching" two or three years of planned giving into a single December, sometimes through a donor-advised fund, pushing itemized deductions above the standard deduction threshold in that one year while taking the standard deduction in the others — increasing the total tax benefit of the same giving without changing how much is actually donated over time.
• Flexible spending account deadlines. Most FSAs are use-it-or-lose-it, sometimes with a small carryover or grace period. A preparer checks the remaining balance against the plan's rules and flags any last-minute eligible expenses — glasses, dental work, an eligible medical device — before the balance is forfeited.

Where W-2 and 1099 households diverge

For a purely W-2 household, most of the year's withholding is already locked in through payroll, so the checklist above — retirement contributions, loss harvesting, charitable bunching, FSA funds — covers the bulk of what's still adjustable. The main additional check is a withholding true-up: comparing year-to-date withholding against projected total tax liability to catch an underpayment before it becomes a April surprise, and adjusting a W-4 for the final pay periods if needed.

For a 1099 or self-employed household, the checklist gets longer, because so much more is still in motion. Estimated quarterly payments need a true-up: a preparer projects full-year net income and compares it against what's already been paid across the year's four estimated payment vouchers, catching a shortfall before the fourth-quarter payment (due mid-January) rather than after. Self-employed retirement plans — a SEP-IRA or Solo 401(k) — often allow far higher contribution limits than a W-2 employee's 401(k), and for a Solo 401(k) specifically, the employee-deferral portion must actually be elected before year-end even though the funding deadline extends later. Preparers also review year-end business equipment purchases eligible for Section 179 expensing, and confirm which business expenses have been tracked versus which have quietly gone unrecorded all year.

Nobody calls their tax preparer in November because they enjoy it. They call because November is the last month a decision still changes the outcome.

A mixed household: the case that needs both lists

A growing number of households run both: a spouse with a W-2 job and steady withholding, and a spouse with 1099 freelance or consulting income. Here the preparer's job is to treat the return as one combined picture rather than two separate ones — for instance, increasing the W-2 spouse's withholding late in the year can sometimes cover a shortfall in the 1099 spouse's estimated payments without needing a separate quarterly payment at all, since withholding is treated by the IRS as paid evenly across the year regardless of when it's actually withheld. This one adjustment can also sidestep an underpayment penalty that a same-sized estimated payment made in January would not avoid, because the IRS calculates that penalty on a quarter-by-quarter basis rather than looking only at the total paid by year-end.

A preparer working with a mixed household also checks whether the 1099 spouse's business is structured in a way that leaves money on the table. A sole proprietor reporting income on a Schedule C pays self-employment tax on the full net profit, while an S-corporation election, once income reaches a meaningful level, can let the owner split earnings between a reasonable salary and a distribution that isn't subject to self-employment tax. That election has a deadline of its own — generally within two and a half months of the tax year it's meant to apply to — which is exactly the kind of detail a year-end review exists to catch before the window closes rather than after.