1. Gather Documents

Collect all 2026 income records. Prioritize W-2 and 1099 forms. Identify 1099-NEC requirements. Issue forms to contractors by February 2. Verify all K-1 statements from partnerships. Track investment income.

Income Verification

• W-2 Wage Statements
• 1099-NEC (Non-employee compensation)
• 1099-MISC (Miscellaneous income)
• 1099-K (Payment card/third-party transactions)
• Schedule K-1 (Pass-through entity income)

Deduction Evidence

• IRA contribution receipts
• HSA contribution records
• Student loan interest (Form 1098-E)
• Mortgage interest (Form 1098)
• Property tax payments
• Charitable donation acknowledgments
• Medical expense receipts (Exceeding 7.5% AGI)

Business Specifics

• Mileage logs (Contemporaneous)
• Home office square footage
• Utility allocations
• Travel receipts
• Meal logs (Note: 50% limit applies)

Organize physical records. Use secure storage for sensitive data. Utilize the A5 Binder Notebook for manual tracking or the Handmade A4 Leather File Folder for contract management.

2. Accounting Integrity

Audit accounting methods. Review fixed asset schedules. Comply with R&D capitalization rules. Expense qualified expenditures immediately. Verify depreciation accuracy.

Action Items

1. Reconcile Accounts: Match bank statements to ledger.
2. Categorize Expenses: Eliminate "Miscellaneous" buckets.
3. Review Transactions: Identify unusual outflows.
4. File Form 3115: Execute required accounting method changes.
5. Document Credits: Support R&D claims with technical reports.

New Standards

The "big beautiful bill" mandates stricter documentation for cross-border transactions. Maintain contemporaneous records. Support all transfer pricing positions. Use digital systems to track conformity. Ensure state and local tax (SALT) alignment.

Manage incoming IRS correspondence. Use Mail Forwarding Yearly to ensure no deadlines are missed while traveling.

3. Payroll Updates

Configure systems for January 1, 2026. Implement new IRS withholding tables. Adjust for inflation-indexed standard deductions. Request updated W-4s from all staff.

Benefit Limits

• Dependent Care FSA: $7,500 limit (Plan amendment required).
• Default Limit: $5,000 (If no amendment filed).
• 401(k) Contributions: Verify updated deferral caps.
• HSA Limits: Adjust for 2026 inflation adjustments.

Compliance Steps

• Test payroll software updates.
• Audit employee classifications (W-2 vs 1099).
• Review state-specific withholding changes.
• Verify UI (Unemployment Insurance) rate adjustments.
• Archive previous year payroll records.

Maintain entity standing. Ensure your Registered Agent Service is active to receive legal notices regarding payroll compliance or tax liens.

4. Tech Integration

Automate data collection. Reduce manual entry errors. Integrate tax software with accounting platforms. Monitor AI-driven audit trends.

Automation Focus

• Real-time Tracking: Use apps for receipt scanning.
• Data Integration: Sync bank feeds directly.
• Apportionment Tracking: Monitor nexus in multiple states.
• Credit Identification: Flag potential clean energy credits.

Audit Preparation

IRS enforcement now utilizes AI for high-risk identification. Focus areas include:

• Transfer pricing discrepancies.
• Executive compensation reasonableness.
• Clean energy credit eligibility.
• Large, unusual business expenses.

Engage professional advisors. Coordinate with consultants to interpret new 2026 guidance. Use Additional Service options for specialized tax strategy consultations.

5. Deduction Stacking

Time expenses strategically. Maximize the "big beautiful bill" benefits. Understand the new thresholds for 2026.

Threshold Changes

• Form 1099-K: Reinstated $20,000 and 200 transaction threshold.
• Form 1099-NEC: $2,000 threshold for non-employee compensation.
• Standard Deduction: Higher limits due to 2026 inflation indexing.

Stacking Strategy

1. Charitable Contributions: C Corporations must exceed 1% of taxable income.
2. Ceiling Limits: 10% maximum for corporate charitable deductions.
3. Bunching: Group two years of donations into one tax year to exceed thresholds.
4. Equipment Purchase: Utilize Section 179 for immediate expensing.
5. Retirement Funding: Maximize employer matches before year-end.

Compliance Timeline

Deadline	Action Required
Jan 1	Implement new withholding tables.
Jan 31	Mail W-2s to employees.
Feb 2	Issue 1099-NEC to contractors.
March 15	S-Corp and Partnership returns due.
April 15	C-Corp and Individual returns due.

Record Retention

Keep records for seven years. Digitized records must be legible. Maintain original documents for significant asset purchases. Use Mail Forwarding 10 Documents for streamlined document handling during tax season.

Entity Maintenance

• Review LLC operating agreements.
• Check state filing status.
• Update Beneficial Ownership Information (BOI) if changes occurred.
• Verify business license renewals.

For specific questions regarding your business structure or 2026 tax positioning, Contact the MCG Service team.

Summary Checklist

• Gather W-2s, 1099s, and K-1s.
• Update payroll for $7,500 FSA limit.
• Reconcile all business bank accounts.
• File Form 3115 for method changes.
• Stack charitable contributions if applicable.
• Verify Registered Agent status.
• Review 1099-K reporting thresholds.
• Test accounting software integration.