It’s January. Your 1099s are coming. Your last year’s tax return is done—but this year’s bill is already being written.

The best time to lower your 2026 tax isn’t in April—it’s right now.

Let’s make five smart, IRS-approved moves before February 1 that will save you money, reduce stress, and set you up for a clean audit trail.

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✅ Move 1: Open a Dedicated Business Bank Account (If You Haven’t)

Commingling personal and business funds is the #1 red flag in IRS audits—especially for sole props and single-member LLCs.

📌 IRS Rule: You must keep separate books and records to prove your expenses are ordinary and necessary (Pub 334, p. 30).

✅ Action: Open a free business checking account (many banks offer $0 monthly fees). Use it for all business income and expenses.

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✅ Move 2: Set Up a “Tax Savings” Account

Self-employed? You’re responsible for income tax + 15.3% self-employment tax on every dollar of profit.

💡 Rule of thumb: Save 25–30% of every payment you receive.

✅ Action: Open a second savings account labeled “Taxes.” Automate a transfer every time you get paid.
→ By April, you’ll have the cash ready—and avoid penalties.

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✅ Move 3: Max Out Last Year’s Retirement Plan (Deadline: Jan 31 for Solo 401(k) Setup)

Yes—you can still reduce your 2025 taxable income!

• Solo 401(k): Set up the plan by January 31, 2026 → fund by April 15, 2026
• SEP IRA: Set up by December 31, 2025—but if you missed it, you’re out of luck for 2025

💰 Example: Contribute $20,000 → reduce 2025 taxable income by $20,000 → save ~$5,000 in tax

✅ Action: Call your financial institution this week to open a Solo 401(k) if you haven’t already.

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✅ Move 4: Reconcile Last Year’s Income Against 1099s

Clients and platforms (PayPal, Venmo, Etsy) will send Form 1099-NEC or 1099-K if you earned $2,000+ in 2025.

⚠️ Warning: The IRS matches these to your Schedule C. If you underreport, you’ll get a CP2000 notice.

✅ Action: Create a spreadsheet with:

• Client name
• Amount you reported
• 1099 amount (when received)
• Difference (if any)

Fix discrepancies before you file.

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✅ Move 5: Choose Your Expense Tracking System—And Stick to It

Last year’s shoebox method? Let’s upgrade.

You only need three things:

1. Mileage log (date, destination, purpose)
2. Receipt folder (digital or physical—for expenses > $75)
3. Monthly expense review (every 30 days)

📱 Free tools: Google Drive (receipts), MileIQ (mileage), Excel (monthly summary)

✅ Action: Spend 20 minutes today setting up your system. Your April self will thank you.

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💡 Final Advice from Uncle Joe

Taxes aren’t a once-a-year event—they’re a year-round habit.
The businesses that thrive aren’t the ones with the highest revenue—they’re the ones with the cleanest records and clearest plan.

So reset now. Get organized. And take control of your tax story.