Year End Tax Package for Your CPA

Ask your CPA for their request list, sometimes called an organizer, and the date they need everything by. Work from their list, not a generic checklist: it's the one they'll tick off.

Their cutoff comes before the federal deadline, which depends on how the business is taxed. S corporations and partnerships must also send each owner a Schedule K-1 by the return's due date.

A year-end close checklist covers the whole close. These five steps feed the tax package.

1. 1

   Reconcile cash and cards

   Match every bank and card account to its December statement, and list outstanding checks and deposits in transit.

2. 2

   Confirm loan balances

   Tie each loan to the lender's year-end statement, and split the year's payments into interest and principal.

3. 3

   Tie payroll to the filings

   Payroll in the books should match the quarterly Forms 941 and the W-2s. The IRS treats health insurance an S corporation pays for an owner of more than 2% as W-2 wages².

4. 4

   Record assets and inventory

   Update your fixed asset register for equipment bought or sold, with the invoices, and count inventory at year end.

5. 5

   File your 1099s

   File a Form 1099-NEC for each contractor you paid $2,000 or more for services in 2026, the year the threshold rose to $2,000³. Payments to corporations are generally exempt, except legal fees. They're due February 1, 2027, since January 31 is a Sunday. A 1099 filing checklist checks each tax ID first.

Show last year's figures beside this year's, with a line explaining any big swing: it's the obvious first question.

Preparers read the trial balance account by account, and any balance they can't classify from its name becomes a question. Answer it in the package: the amount, what it is and the document that proves it. Start with these:

• Suspense, Ask My Accountant or Uncategorized: list each item with its date and purpose.
• Undeposited Funds: only money received before year end and banked after it belongs here.
• Opening Balance Equity: find out what's in it, then clear it or explain it.
• A debit in accounts payable: usually a prepayment, a duplicate payment or an unapplied credit.
• Money between the business and its owners: say whether each amount is a loan or a distribution.
• Accrued expenses: split the total into its parts, since each can follow a different tax rule.

If many accounts need notes, a balance sheet reconciliation ties each one to outside evidence.

Books and tax returns measure profit differently, and most corporate and partnership returns reconcile the two. On the S corporation return, that's Schedule M-1², or the longer Schedule M-3 at $10 million or more in assets. List the differences you know, with amounts, so your CPA checks them instead of hunting for them.

That last row needs care. The IRS says expenses owed to a related person who uses the cash method aren't deductible until you pay them⁶. For an S corporation, section 267 of the tax code⁷ treats every shareholder as a related person for this rule, however small the stake. Their spouses, parents, children and siblings count too.

In the example above, both owner bonuses, $125,000 in all, become 2027 deductions, including the 18% owner's. The $46,400 of staff vacation pay stays in 2026: the IRS allows a current deduction for vested vacation pay paid within 2½ months⁶ of year end. Both were paid by mid-March. Stock ownership changes the answer.

That adds $125,000 to the taxable profit the owners report for 2026. It reverses in 2027, but owners who set aside tax based on book profit will come up short.

Keep a request log with your CPA's wording in the first column, then where each item lives, its owner, its status and the date sent. If they ask for something you already sent, the log shows where it is.

Put everything in one folder, named to match the log, and use your CPA's secure portal rather than email. Add a cover note listing what's still open and when it will follow.

For a faster first draft, paste your trial balance and your CPA's list into the tool at the top of this page. It drafts the request log, the account questions and a book-to-tax reconciliation for your CPA to review.