Chapter 15: The year-end playbook
Fourteen chapters of tax law compress into about six days of actual attention: one in February, one in April, one in June, and three or four in December. This closing chapter is the whole playbook laid out as a calendar, with a checklist for each season, a glossary for every bolded term, and one reference table holding all of 2026's numbers. Print the calendar, work the lists, and the rest of the year belongs to your life instead of your taxes.
January and February: open the year
The year starts with two jobs: settle last year and aim this one.
Open the year
- January 15: final estimated payment for last year, if you make quarterly payments (Chapter 11).
- Run the February paycheck checkup from Chapter 14: project this year's withholding against this year's likely tax, and file a new W-4 if the gap tops a few hundred dollars.
- Collect W-2s and 1099s as they arrive, and check every 1099-B for missing basis before filing; Chapter 14's CP2000 stories start here.
- Find last year's capital-loss carryforward on Schedule D and write it down; it offsets this year's gains (Chapter 5).
- Top up last year's IRA ($7,500) and HSA ($4,400 self / $8,750 family) if you have room; contributions for the prior year are allowed until April 15, a genuine second chance at a deduction for a year that already ended.
That last line deserves its own sentence, because almost nobody uses it. From January 1 to April 15 you are living in two tax years at once, and money put into an IRA or HSA during that window can be stamped for either one. A prior-year HSA contribution in March is the only time machine the tax code sells.
April: settle, then start again
April 15 is three deadlines wearing one date: last year's return (or an extension), the first estimated payment for the new year, and the final call for those prior-year IRA and HSA dollars. An extension buys six months to file the paperwork, never extra time to pay; estimate the bill and send it with the extension, or penalties and interest run anyway. Once the return is filed, spend ten minutes on a post-mortem. A big refund or a big balance due is feedback, and the W-4 or the quarterly amounts should move in response.
June: the mid-year check
Priya's quarterly dates are taped inside a kitchen cabinet: April 15, June 15, September 15, January 15. The spacing is the trap: the second "quarter" is only two months long, so June arrives faster than the word quarterly suggests. Every June she also runs a half-year profit total, multiplies by two, and checks the projection against her safe harbor: 100% of last year's tax (110% once her AGI passes $150,000), or 90% of this year's. Ahead of pace, she relaxes until September. Behind, she fixes it while six months of paychecks and two payment dates remain.
The same June check works for W-2 earners with equity. Maya's vests land all year, so in June she compares total withholding so far, plus what the rest of the year will add, against her projected bill, and adjusts the Step 4(c) extra-withholding line from Chapter 14 while there are still a dozen paychecks to spread the fix across. A gap discovered in June costs $1,300 a paycheck less than the same gap discovered in December.
October through December: money season
Most of this playbook's dollars are decided in the last ten weeks of the year, for one reason: by then you finally know what the year looks like. Income, gains, losses, and bracket are no longer guesses, so the moves that depend on them can be sized exactly. Work the four lists in order.
1. The portfolio sweep
- Tax-loss harvest: sweep taxable accounts for positions below basis, mind the 61-day wash-sale window, and pause automatic reinvestments first (Chapter 5).
- Low-income year instead: harvest gains, not losses, up to the 0% line ($49,450 single / $98,900 joint of taxable income), and reset basis for free (Chapter 4).
- Buying any mutual fund in a taxable account: check its capital-gain distribution estimate first, and wait out the ex-date when it is big (Chapter 4).
2. The giving decisions
- Run the December tally from Chapter 3: capped SALT plus mortgage interest plus gifts against your standard deduction. Near the line, bunch.
- Give appreciated shares, never cash, for any large gift: the deduction plus the skipped gain is the double play (Chapter 12).
- Bunching years: a donor-advised fund takes one big deductible gift now and pays charities on your schedule later (Chapter 12).
- Age 70½ or older with an IRA: a QCD straight from the IRA counts toward the RMD and never touches AGI (Chapter 12).
- Standard-deduction filers: the $1,000 / $2,000 cash-gift deduction still counts; keep the receipts.
3. The retirement plumbing
- 401(k) contributions only move through payroll, so the math must finish before the last paycheck, in October or November, never on December 30. Check progress toward $24,500 (plus $8,000 at 50+, or $11,250 at ages 60–63) and raise the percentage in time.
- Mega-backdoor users: check remaining after-tax space and the in-plan conversion (Chapter 8); this also dies with the final paycheck.
- Backdoor Roth done this year: confirm pre-tax IRA balances are zero (or rolled into the 401(k)) before December 31, the pro-rata snapshot date (Chapter 8).
- HSA payroll contributions beat direct deposits by 7.65% in payroll tax, and they also need paychecks left to run through (Chapter 7).
4. The December decisions
- Size any Roth conversion now, after the year's income is known, never in January on a forecast. Fill the chosen bracket to the dollar, check the IRMAA lines two years out ($109,000 single / $218,000 joint), and finish by December 31; conversions cannot be undone (Chapter 9).
- Take RMDs by December 31. The penalty for missing one is severe, and December 31 is a hard wall.
- Spend down the FSA: most plans forfeit unused money, and the grace period or small carryover, if any, is in the plan documents.
- Use the gift exclusion: $19,000 per recipient, per giver, resets to zero on January 1 and never carries forward.
Carlos and Elena run their conversion ritual in the second week of December. With every 1099 knowable and Social Security still years away, they total the year's actual income, subtract it from the top of their target bracket, and convert exactly that much to Roth, after checking that the conversion stays under the IRMAA cliff that would raise Carlos's Medicare premiums two years later. The whole exercise takes an evening, and it works precisely because they waited for December's real numbers instead of January's guesses.
What dies on December 31, and what survives
Half the panic of late December comes from not knowing which deadlines are real. This table is the answer.
| Must finish by December 31 | Still open until April 15 |
|---|---|
| 401(k) and mega-backdoor contributions (last paycheck, in practice) | IRA contributions for the prior year |
| Tax-loss harvests and 0% gain harvests (trade date counts) | HSA contributions for the prior year |
| Roth conversions | Filing the return, or extending to October 15 |
| RMDs | Paying with the return (with interest meters running from April 15) |
| Charitable gifts and DAF funding for this year's deduction | Self-employed SEP and solo 401(k) employer contributions (filing deadline, extensions included) |
| $19,000 annual gifts per recipient | |
| FSA spending (check the plan's grace rules) |
Decide with December numbers. Conversions, harvests, bracket fills, and gift bunching sized in December use real income; the same moves made in January are bets on a forecast. The only year-end work that cannot wait for December is anything that runs through payroll, which must be set while paychecks remain.
The glossary
Every bolded term in this playbook, in one place.
| Term | Plain meaning |
|---|---|
| 0% gain harvesting | Selling long-term winners in a low-income year so the gain lands in the 0% bracket, then rebuying to reset basis (ch4) |
| AGI | Adjusted gross income: total income minus a short list of adjustments; the gatekeeper number for dozens of phaseouts (ch1) |
| AMT | Alternative minimum tax: a parallel calculation with fewer breaks; ISO exercises are its main civilian trigger (ch2, ch10) |
| Backdoor Roth | Contributing to a nondeductible IRA and converting it, the legal path around Roth income limits (ch8) |
| Basis | What you paid for an asset; only growth above basis is ever taxed (ch4) |
| Bracket | A tax rate that applies only to the slice of taxable income inside its range (ch1) |
| Bunching | Concentrating deductible expenses, mostly charity, into alternating years to beat the standard deduction (ch3) |
| Carryforward | Unused capital losses that roll into future years indefinitely, $3,000 a year against ordinary income (ch5) |
| CP2000 | The IRS matching notice proposing changes when a 1099 or W-2 is missing from a return; a proposal, never a bill (ch14) |
| Credit | A dollar-for-dollar reduction of tax itself, worth the same in every bracket (ch1) |
| DAF | Donor-advised fund: take the full deduction now, grant the money to charities over time (ch12) |
| Deduction | A reduction of taxable income, worth your marginal rate per dollar (ch1) |
| Domicile | Your one true home for state tax purposes, judged on facts and circumstances, kept until genuinely replaced (ch13) |
| Effective rate | Total tax divided by income: the average across all brackets, always below the marginal rate (ch1) |
| Form 8606 | The form that records nondeductible IRA money so it is never taxed twice; keep every one forever (ch8, ch14) |
| FSA | Flexible spending account: pre-tax money for health costs that mostly expires at year-end (ch15) |
| HSA | Health savings account: deductible going in, tax-free growth, tax-free out for medical costs; the only triple play (ch7) |
| IRMAA | Income-based Medicare premium surcharges, set by the return from two years earlier (ch9) |
| ISO | Incentive stock option: favorable treatment if held long enough, with AMT risk at exercise (ch10) |
| Itemized deductions | SALT, mortgage interest, and charity, claimed instead of the standard deduction when larger (ch3) |
| MAGI | Modified AGI: AGI with certain items added back; the test number for Roth limits, IRMAA, NIIT, and more (ch1) |
| Marginal rate | The rate on your next dollar; the number that prices every decision (ch1) |
| Mega backdoor | After-tax 401(k) contributions converted in-plan to Roth, far above normal limits, if the plan allows (ch8) |
| NIIT | The 3.8% net investment income tax above $200,000 single / $250,000 joint MAGI (ch4) |
| Pro-rata rule | On a Roth conversion, all IRA money counts as one pool, so pre-tax balances make conversions partly taxable (ch8) |
| QBI | Qualified business income: the 20% deduction for self-employment and pass-through profits, now permanent (ch11) |
| QCD | Qualified charitable distribution: IRA-to-charity at 70½+, counts toward the RMD, never enters AGI (ch12) |
| RMD | Required minimum distribution from pre-tax retirement accounts, due each year by December 31 (ch9) |
| Roth conversion | Moving pre-tax retirement money to Roth, paying tax now at a chosen rate instead of later at an unknown one (ch9) |
| RSU | Restricted stock unit: taxed as ordinary income at vest, then like any stock afterward (ch10) |
| Safe harbor | The payment levels (90% / 100% / 110%) that eliminate underpayment penalties regardless of the final bill (ch11) |
| SALT | State and local taxes: deductible for itemizers up to $40,400 in 2026, $10,000 from 2030 (ch2, ch3) |
| Standard deduction | The flat deduction everyone gets: $16,100 / $32,200 / $24,150 in 2026 (ch1) |
| Step-up in basis | Inherited assets reset their basis to date-of-death value, erasing the gain tax forever (ch4) |
| Supplemental wages | Bonuses and RSU vests, withheld at a flat 22% federal rate that rarely matches your real bracket (ch10) |
| Taxable income | AGI minus your deduction: the number the brackets actually apply to (ch1) |
| Wash sale | Rebuying the same or a substantially identical security within the 61-day window, disallowing the harvested loss (ch5) |
| Withholding | Tax sent in from each paycheck per your W-4, treated as paid evenly across the year whenever it happens (ch1, ch14) |
The 2026 numbers, one table
| Item | 2026 | Source |
|---|---|---|
| Brackets, single | 10% to $12,400 · 12% to $50,400 · 22% to $105,700 · 24% to $201,775 · 32% to $256,225 · 35% to $640,600 · 37% above | IRS · Tax Foundation |
| Brackets, married filing jointly | 10% to $24,800 · 12% to $100,800 · 22% to $211,400 · 24% to $403,550 · 32% to $512,450 · 35% to $768,700 · 37% above | IRS |
| Standard deduction | $16,100 single · $32,200 MFJ · $24,150 head of household | IRS |
| Long-term capital gains | 0% to $49,450 / $98,900 · 15% to $545,500 / $613,700 · 20% above | IRS |
| NIIT | 3.8% above $200,000 / $250,000 MAGI; top short-term 40.8% vs long-term 23.8% | IRS Pub 550 |
| 401(k) limit | $24,500, plus $8,000 at 50+, or $11,250 at ages 60–63 | IRS |
| IRA limit | $7,500, plus $1,100 at 50+ | IRS Pub 590-A |
| Roth IRA phaseout | $153,000–$168,000 single · $242,000–$252,000 MFJ | IRS Pub 590-A |
| HSA limit | $4,400 self · $8,750 family, plus $1,000 at 55+ | IRS Pub 969 |
| 529-to-Roth rollover | $35,000 lifetime; 15-year-old account, 5-year-old contributions | IRS Pub 590-A |
| Gift and estate exclusions | $19,000 per recipient per year · $15,000,000 lifetime estate | IRS |
| Home-sale gain exclusion | $250,000 single / $500,000 MFJ, 2-of-5-year use test | IRS Topic 701 |
| Mortgage interest | Deductible on up to $750,000 of acquisition debt, itemizers only | IRS Pub 936 |
| SALT cap | $40,400, rising 1% a year; phases down above $500,000 MAGI; reverts to $10,000 in 2030 | IRS OBBBA hub |
| Tips deduction | Up to $25,000, 2025–2028 only, phases out above $150,000 / $300,000 MAGI, listed occupations only | IRS OBBBA deductions |
| Overtime deduction | Premium portion of FLSA overtime, up to $12,500 / $25,000, 2025–2028, same phaseouts | IRS OBBBA deductions |
| Senior deduction | Extra $6,000 at 65+, 2025–2028, phases out above $75,000 / $150,000 MAGI | IRS OBBBA deductions |
| Charitable rules | Non-itemizers: $1,000 / $2,000 cash, permanent · itemizers: 0.5%-of-AGI floor, 35% maximum benefit | IRS OBBBA hub |
| QBI deduction | 20% of qualified business income, permanent, with service-business phase-ins | IRS OBBBA hub |
| AMT exemption | $90,100 single / $140,200 MFJ, phasing out at 50% above $500,000 / $1,000,000 | IRS |
| IRMAA | Surcharges start at $109,000 / $218,000 MAGI, using the return from two years earlier | Medicare IRMAA brackets |
| Estimated-tax safe harbors | Owe under $1,000, or pay 90% of this year, or 100% of last year (110% above $150,000 AGI) | IRS Estimated Taxes |
| Supplemental withholding | Flat 22% federal to $1,000,000 of supplemental wages, 37% above | IRS: About Form W-4 |
A system you tune
Fifteen chapters ago, taxes looked like a season: a pile of forms, a deadline, and a verdict delivered once a year. The truth this playbook has been building toward is gentler. Taxes are a system you tune a few days a year, not a season you dread. The February checkup keeps withholding honest. The June check keeps the safe harbor in reach. The December lists turn real numbers into exact moves: a harvest sized to the gains, a conversion filled to the bracket, a gift bunched into the right year. None of it requires genius, and almost none of it requires speed. It requires a calendar, the cardinal rule from Chapter 1, and the willingness to spend six unglamorous days so the other 359 are quiet.
Jamie tunes a W-4 and harvests a first loss. Maya closes a $15,600 withholding gap with one payroll form. Priya tapes four dates inside a cabinet. Carlos and Elena convert to the top of a bracket every December. Renee files the status she earned. The machine is the same for all of them, and now it is the same for you.
Key takeaways
- The whole playbook runs on about six days a year: a February withholding checkup, the April settlement, a June safe-harbor check, and a few December decision days.
- January to April 15 is a two-year window: prior-year IRA and HSA contributions are the tax code's only time machine.
- Money season is October through December because income is finally known: harvest losses or 0% gains, dodge fund distributions, decide giving, and finish payroll-based contributions while paychecks remain.
- Size Roth conversions in December with real numbers, never in January with guesses, and respect the December 31 hard wall: conversions, RMDs, gifts, and harvests do not extend.
- The $19,000 gift exclusion, this year's FSA balance, and an unclaimed RMD all expire at midnight on December 31.
- Taxes are a system you tune, and every number you need for 2026 is in the table above.
Sources: IRS: 2026 Tax Inflation Adjustments · IRS: One Big Beautiful Bill Provisions · IRS: OBBBA Deductions for Working Americans and Seniors · IRS: Federal Income Tax Rates and Brackets · Tax Foundation: 2026 Tax Brackets · IRS: Publication 590-A · IRS: Publication 969 · IRS: Estimated Taxes · IRS: About Form W-4 · Medicare IRMAA Brackets Reference