Why You Need a Mid-Year Tax Review

Andrew Schliesman
Aug 12
2 min read

If you only think about taxes at year-end, you’re leaving money on the table—and inviting avoidable surprises. A mid-year tax review (June–August) gives you time to fix issues, capture deductions, and steer your tax bill while there’s still runway left in the year.

What a Mid-Year Review Does:

Projects your 2025 tax bill using what’s happened so far—so you can course-correct now, not in April.
Catches life and business changes (new job, side income, moves, marriage/divorce, new dependents, retirement contributions) that shift your tax picture.
Optimizes withholding & estimated taxes to avoid penalties or big refunds (which are just interest-free loans to the IRS).
Surfaces available deductions/credits you can still qualify for this year, rather than missing them at year-end.
Aligns tax choices with goals: cash flow, debt payoff, retirement saving, and growth plans.

For Individuals & Families

Withholding checkup: Adjust W-4 so paychecks match your target outcome (smaller refund or smaller balance due).
Side-gig/1099 income: Dial in quarterly estimates; track business expenses, home office, mileage, and phone/internet allocations.
Life events: Update filing status and credits (Child Tax Credit, Education Credits) after changes like a new child, college tuition, or divorce.
Retirement & health savings: Increase 401(k)/403(b)/TSP and IRA contributions; confirm HSA/FSA funding to reduce taxable income.
Charitable giving strategy: Consider bunching donations, donor-advised funds, or appreciated stock gifts.
Energy-related upgrades & vehicles: If you plan to make improvements or purchase a new vehicle this year, a mid-year chat helps you plan the timing and documentation to qualify for available credits.

For Small Business Owners

Books & cash flow tune-up: Reconcile accounts, clear old transactions, and clean your chart of accounts so tax projections are accurate.
Entity/compensation review: Ensure S-corp owners are on reasonable compensation; consider an accountable plan and reimbursements.
Quarterly estimates & payroll taxes: Set (or reset) safe-harbor payments; review payroll settings to avoid under-withholding.
Deduction capture: Mileage logs, home office, supplies, equipment (Section 179/bonus), software, professional education, and travel—get systems in place now.
QBI (20% pass-through deduction) planning: Evaluate wages/UBIA and whether mid-year adjustments support eligibility.
Sales/use tax and nexus: Confirm registrations and filing cadence if you’ve added states or online platforms.
Retirement plan options: Still time to adopt or fund a Solo-401(k), SEP, or SIMPLE for meaningful deductions and owner wealth building.

What You’ll Walk Away With

A clear tax projection with best, base, and worst-case scenarios.
Action list (with dates) for withholding changes, estimated payments, and contribution targets.
Documentation checklist so deductions/credits survive an audit.
Simple tracking tools (mileage, accountable plan, receipt workflow) tailored to how you actually work.

Quick Checklist: Bring This to Your Review

Year-to-date pay stubs (you and spouse)
Prior-year tax return
Brokerage/retirement statements (YTD)
Bookkeeping reports (P&L, balance sheet, cash flow)
Mileage and home-office details (if applicable)
Notes on significant changes: job, benefits, moves, dependents, major purchases, grants/forgivable loans
Planned events before year-end: large equipment buys, property sale, tuition payments, charitable gifts

Why Mid-Year Beats Year-End

By December, many levers have been removed (payroll cycles, plan setup deadlines, contribution pacing). Mid-year provides an opportunity to adjust, document, and execute tasks calmly. The result is fewer surprises and a more streamlined, less expensive tax season.