2025 Year-End Tax Closing in 6 Steps
Your ear-End Tax Closing Easy
The end of the year is approaching and with it, your tax closing.
Whether you’re an employee, freelancer, business owner, or part of an LLC, December is the key month to adjust your financial situation and reduce what you’ll owe to the IRS in 2026.
Planning ahead helps you avoid costly mistakes and could save you thousands in taxes.
At Jambrina CPA, we’ve prepared a simple and practical guide to help you get ready for your year-end tax closing.
Step 1: Review Your Income and Withholdings
Before the year ends:
Compare your last pay stub of the year: Make sure your total income and withholdings match what should appear on your upcoming W-2 or 1099 forms.
Evaluate your estimated payments: If you’re self-employed or a business owner, review your quarterly payments (Form 1040-ES).
Adjust your withholdings: Use the IRS Tax Withholding Estimator to confirm that you’re withholding enough.
If you expect a large refund or fear you’ll owe money, December is your last chance to balance your taxes.
Step 2: Maximize Your Deductions
The IRS allows several deductions that can make a significant difference at year-end.
Personal Deductions
Medical expenses: Deduct the portion exceeding 7.5% of your Adjusted Gross Income (AGI).
Mortgage interest: Applies if you itemize on Schedule A.
Charitable donations: Valid only if made before December 31 to IRS-approved organizations.
Business Deductions
Equipment, software, and furniture: If purchased and placed in service before year-end, they may qualify for Section 179 or bonus depreciation.
Business vehicles: Deductible if you maintain updated mileage logs (Standard Mileage Rates).
Professional education: Courses or certifications that enhance your work skills are deductible.
Every dollar you spend strategically before December 31 can mean less tax to pay.
Step 3: Contribute to Your Retirement Plan
Contributions to retirement plans are one of the most effective ways to reduce your taxes and secure your financial future.
IRS Limits for 2025:
401(k): Up to $23,500 (plus an extra $7,500 if you’re age 50+).
Traditional IRA: Up to $7,000 (plus an additional $1,000 if you’re age 50+).
SEP IRA: Ideal for self-employed individuals and small business owners.
These contributions lower your taxable income, and if made before December 31, they count toward your 2025 tax return.
Step 4: Review Your Tax Credits
Credits directly reduce the amount you owe the IRS, not just your taxable income.
Make sure you claim every credit that applies:
Child Tax Credit (CTC): Up to $2,000 per qualifying child.
Earned Income Tax Credit (EITC): For low to moderate-income workers.
American Opportunity & Lifetime Learning Credits: For higher or professional education.
Energy Credits: If you made eco-friendly home improvements or installed solar panels.
Step 5: Organize Your Accounting
Accurate accounting is the foundation of any tax strategy.
Before closing the year:
Separate personal and business expenses.
Keep all receipts, invoices, and digital records.
Update your balance sheet and income statement.
Review your financial reports and bank reconciliations.
The IRS recommends keeping your records for at least three years.
If you manage an LLC, you might qualify to be taxed as an S-Corp, consult with us to see if this status benefits you.
Step 6: Plan Your 2026 Tax Strategy
An efficient year-end closing helps you start 2026 with financial order and a lighter tax burden.
Planning now allows you to:
Take advantage of credits and deductions on time.
Avoid penalties for underpayment.
Adjust your accounting strategies.
Legally reduce your taxable income.
The IRS does not grant extensions for late deductions, if you don’t act before December 31, it’s too late.
Close Your Fiscal Year Strong with Jambrina CPA
At Jambrina CPA, we help you:
Identify deductions and credits before December 31.
Adjust your estimated payments and withholdings.
Review your accounting and prepare applicable forms (1040, 1040-NR, 1065, 1120).
Create a personalized strategy with bilingual CPAs for 2026.
We guide you step-by-step through your 2025 Year-End Tax Closing, helping you maximize every available tax benefit, whether you’re in Houston or anywhere across the U.S.
Our bilingual CPA team advises you in English or Spanish so you can end the year fully compliant with the IRS.