**The Key to Avoiding Surprises in 2026**

When most people think about taxes, they picture the moment they file their annual return. However, the IRS recommends keeping ongoing track of your income, withholdings, and expenses throughout the year, and this creates a key difference between Monthly Tax Planning and Annual Tax Planning.

These two strategies determine how well you prepare for the 2026 tax season, how much you can save during the 2025 tax year, and how efficient your accounting process will be.

What Is Annual Tax Planning?

Annual Tax Planning is the once-a-year review that typically happens between November and April to prepare your tax return and evaluate your final IRS obligations.

It includes organizing:

W-2, 1099, 1098, or other tax documents
Year-end deductions
Tax credits
Retirement contributions made before December 31
Late accounting adjustments

What does this mean?

If your income is stable and well organized, this annual review may be enough.
But if your income or expenses change month to month, relying only on an annual review limits your tax-saving opportunities and increases the risk of errors or penalties.

What Is Monthly Tax Planning?

Monthly Tax Planning is an ongoing strategy in which your financial data is reviewed every month to adjust your tax position in real time.

It includes:

Monthly review of income and expenses
Ongoing bookkeeping updates
Adjustments to estimated tax payments (Form 1040-ES)
Monitoring withholdings to prevent IRS debt or oversized refunds
Identifying deductions before they expire

What does this mean?

Instead of waiting until April to discover mistakes, surprises, or unexpected IRS debt, Monthly Tax Planning allows you to take action immediately.

This approach is especially beneficial for LLCs, Corporations, freelancers, realtors, service businesses, and anyone with variable income.

Differences Between Annual and Monthly Tax Planning

Annual Tax Planning:

One review per year
Ideal for stable income
Less control over accumulated expenses
Higher risk of discovering issues too late

Monthly Tax Planning:

Continuous review
Better document organization
Errors corrected before year-end
Better cash flow control
Lower risk of IRS penalties

When Should You Use Each Method?

Choosing between Monthly Tax Planning and Annual Tax Planning depends on how you generate income and how complex your financial situation is.

When Annual Tax Planning Works Best:

Annual planning is sufficient if:

You have a fixed salary, and your employer withholds taxes automatically
You don’t own a business, properties, or complex deductions
Your income is stable throughout the year
You simply need to organize your documents and file correctly

In these cases, an annual review is usually enough.

When Monthly Tax Planning Is the Better Choice:

Monthly planning is recommended if:

You’re a business owner, LLC, or Corporations
You work independently as a 1099, freelancer, contractor, or content creator
Your income changes throughout the year
You manage temporary rentals, rental properties, or frequent business expenses
You want to avoid IRS debt or tax season surprises

Monthly Planning lets you adjust payments, deductions, and withholdings on time, not when it’s too late.

How to Use This Strategy Before the End of 2025

The key to a successful tax year is acting before December 31.

Recommended actions:

Review your actual income for the year
Check whether your estimated taxes are correct
Confirm your withholdings are sufficient
Identify missing expenses and deductions
Decide whether year-end strategic purchases are necessary

Get Ahead with Jambrina CPA

A continuous tax strategy allows you to stay in control of your taxes, bookkeeping, deductions, and IRS obligations without waiting until the end of the year.

At Jambrina CPA, we help you implement both systems with clarity, structure, and strategies tailored to your business.

Annual vs. Monthly Tax Planning