Every year, a version of you scrolls past the year-end tax tips, opens a shoebox (or a downloads folder, which is the same thing) in March and says, “Why didn’t I do this in December?”
March you has opinions about December you. Let’s give her fewer.
If you’re self-employed in the US, the end of the year is a quiet deadline hiding inside a holiday season. Some money decisions only count if you make them before December 31. One payment is due in January. And nearly everything else gets easier if you spend one calm afternoon in December instead of one panicked weekend in spring.
Short answer: Before December 31, self-employed people should find their year-to-date profit, estimate what they’ll owe, and ask their CPA about retirement accounts, planned purchases and the timing of income, because those choices can depend on the calendar year. The fourth-quarter federal estimated tax payment is due around January 15. After the new year, gather your forms and book your tax appointment early.
Quick, important note: I’m not your CPA, and this isn’t tax advice. Think of these year-end tax tips as the right list of questions to bring to one.
Why does December 31 matter so much for self-employed taxes?
Because most of what shapes this year’s tax bill has to happen within this year. For most small businesses, the income you receive and the expenses you pay within a calendar year generally count toward that year’s taxes, and once the year closes, a lot of your options close with it. A few things can still be handled after December 31, and your CPA can tell you which ones apply to you.
That’s why year-end money moves belong in early December. Your CPA still has time to answer, and you still have time to act on what they say.
The Before, By and After List: year-end tax tips by deadline
I like to sort year-end money moves by when they actually have to happen. It stops you from panicking about everything at once, and your nervous system deserves that kindness in December.
| When | What to do | Who’s involved |
|---|---|---|
| Before December 31 | Know your profit, estimate your tax, ask about retirement accounts, planned purchases and income timing | You and your CPA |
| By about January 15 | Make your fourth-quarter estimated payment and set next year’s tax set-aside | You, with your CPA on the amount |
| After the new year | Gather forms, finish your books, book your tax appointment | You, your bookkeeper and your CPA |
What money moves should I make before December 31?
Start with your numbers, because they decide which year-end money moves make sense for you. Then take your questions to your CPA while there’s still time to act on the answers.
1. Find your year-to-date profit. Revenue minus business expenses, as of today. Nearly every other decision depends on this number, so make it as accurate as you can. If your bookkeeping is behind, this is the week to catch up.
2. Estimate your self-employment tax. In the US, self-employment tax is 15.3% (12.4% for Social Security, up to an annual earnings cap that changes each year, and 2.9% for Medicare), applied to 92.35% of your net self-employment earnings, and half of it is deductible. It sits on top of federal income tax, plus state income tax if your state has one. Compare your estimate with what you’ve set aside and what you’ve already paid.
3. Ask your CPA about retirement accounts. Self-employed people have several retirement account options, and some may need to be opened or funded by certain dates. Limits and deadlines vary by account type and change over time, so ask your CPA before December 31 which account fits you and what has to happen when.
4. Ask your CPA about planned purchases. If you were already going to buy a new laptop, a camera or a year of software, ask whether buying before or after December 31 makes a difference for you.
5. Ask your CPA about income timing. Depending on how your business is set up, when you invoice and when you get paid can affect which year the income counts in. Ask before you start moving invoices around.
6. Tidy your records. Separate personal charges on your business card, and business charges on your personal card. Gather receipts. If you track mileage or use part of your home for work, complete your notes while you still remember the details.
7. Collect W-9s from contractors. If you paid contractors this year, get their W-9 forms now, while everyone’s still answering email. Ask your CPA or bookkeeper which forms you need to file and when.
Should I buy things before December 31 to lower my taxes?
Only if you were going to buy them anyway. A deduction lowers your taxable income. It doesn’t make the purchase free.
Here’s the shape of the math, using a made-up tax rate. If the combined tax on your last dollars of profit were around 30%, a $2,000 equipment purchase might lower your tax bill by about $600. You’d still be out $1,400. That’s a good deal if you needed the equipment, and a $1,400 mistake if you didn’t.
So when you talk year-end money moves with your CPA, the question isn’t “what can I buy?” It’s “I’m already planning to buy these things soon. Does it help to buy them before December 31?”
A worked example: year-end tax tips in action
Let’s say it’s early December and you’ve netted $60,000 so far this year (revenue minus business expenses). Here’s a rough self-employment tax estimate:
- Net earnings: $60,000
- Portion subject to self-employment tax: $60,000 times 92.35% is $55,410
- Self-employment tax: $55,410 times 15.3% is about $8,478
- Deductible half: about $4,239, which reduces the income your income tax is figured on
That $8,478 comes before federal income tax and any state income tax, which depend on your deductions, filing status and where you live. Now compare it with what you’ve actually done. If you’ve been setting aside a percentage of every payment and making your estimated payments, you may be in decent shape (your CPA can confirm). If you’ve set aside $2,000 and paid nothing, you know exactly what December needs to be about, and you know it now instead of in March.
The number might not be fun. It’s still kinder than a surprise.
Which money moves are due by January 15?
The fourth-quarter federal estimated tax payment is due around January 15. Federal estimated payments are due quarterly, around April 15, June 15, September 15 and January 15. Your state may have its own schedule. Ask your CPA how much to pay, especially if your income bounced around this year.
January is also the perfect moment to set next year’s tax set-aside, so the tax portion of every payment moves out of reach before you can spend it.
Which year-end tax tips can wait until after the new year?
Filing, and the paperwork that leads up to it. Early in the year, forms will arrive from clients and payment platforms, and you’ll finish closing your books. Book your CPA appointment early, because tax season fills calendars fast. Bring your year-to-date snapshot, your receipts and your list of questions.
Try this today: four numbers and one email (15 minutes)
Write four numbers on a sticky note:
- Revenue so far this year
- Business expenses so far this year
- Money set aside for taxes
- Estimated payments made this year
Then send your CPA this email (copy it, tweak it, send it):
Hi [name], before December 31 I’d love to check three things: which retirement account makes sense for me and what has to happen by when, whether any purchases I’m already planning should happen before or after year-end, and whether the timing of my December invoices matters. My year-to-date profit is about [number]. Could we find a time to talk this month?
No CPA yet? This is your sign to find one now, not in March.
If you’d like your tax money to sort itself
Most year-end money stress comes from one habit: spending the tax money before it’s been set aside. The Pay Yourself Planner turns irregular income into a steady monthly paycheck, sets your profit buckets and buffer fund target, and shows how much to set aside from every payment for taxes. Next December can be boring. The good kind of boring.
And if you want to see how taxes change what you need to charge, the Profit Calculator includes current-year US self-employment and income tax with the standard deduction, a state tax percentage and an optional QBI toggle, then gives you your break-even and thriving rates.
Quick answers
What year-end tax tips matter most for self-employed people?
The year-end tax tips that matter most happen before December 31, when self-employed people should make a few money moves: check their year-to-date profit, estimate self-employment and income tax, tidy their records and collect contractor W-9s. They should also ask a CPA about retirement contributions, planned purchases and the timing of income, because many of those decisions depend on the calendar year and are harder to change once it ends.
When is the fourth-quarter estimated tax payment due?
The fourth-quarter federal estimated tax payment is due around January 15. Federal estimated payments are due quarterly, around April 15, June 15, September 15 and January 15. States with an income tax may have their own schedules. Ask your CPA how much to pay, especially if your self-employed income changed a lot during the year.
How much is self-employment tax?
Self-employment tax in the US is 15.3%: 12.4% for Social Security, up to an annual earnings cap, and 2.9% for Medicare. It applies to 92.35% of your net self-employment earnings, and half of it is deductible. It comes on top of federal and state income tax, which is why self-employed people should set aside part of every payment.
Should I buy equipment before the end of the year for a tax deduction?
Buy equipment before the end of the year only if you’d buy it anyway. A deduction reduces your taxable income, but it doesn’t refund the full cost, so spending money you didn’t need to spend still leaves you with less. Ask your CPA before December 31 whether buying planned equipment now or next year makes more sense.
Can I still open a retirement account for this tax year?
It depends on the type of account. Self-employed retirement accounts have different rules about when they must be opened and when contributions are due, and those rules can change. Ask your CPA before December 31 which retirement account fits your situation and what needs to happen this year for it to count.
You don’t have to love taxes. You just have to stop letting them surprise you, and one December afternoon of year-end money moves is enough to start.