Before the fourth quarter begins, high earners may benefit from comparing year-to-date income and tax payments with what is still expected before December 31. Salary, bonuses, RSUs, business income, investment gains, retirement contributions, and withholding can change throughout the year. A pre-Q4 projection can help identify which assumptions still hold and which may need to be updated.
Why Review Taxes Before Q4?
By late September, much of the year has already happened.
Taxpayers may have:
- Eight or nine months of payroll data
- Multiple RSU vesting events
- Realized investment gains
- Business-income results
- Retirement contributions
- Three estimated-tax payment periods
At the same time, the fourth quarter can still contain significant financial events.
Year-end bonuses may arrive. More equity may vest. Investments may be sold. Retirement-plan contributions may change.
That makes the transition into Q4 a useful point to compare what was expected with what actually occurred.
1. Review All Income Sources
Begin with the income side of the projection.
Include, as applicable:
- Salary
- Spouse’s salary
- Bonuses
- Commissions
- RSUs
- Stock options
- Business income
- Consulting income
- Rental income
- Interest
- Dividends
- Capital gains
- Retirement distributions
Then identify what income may still arrive during the final three months.
The IRS notes that estimated-tax calculations can involve income not covered by withholding, including investment gains, rent, dividends, interest, and self-employment income. (IRS)
2. Compare Income With Tax Payments
Next, determine how much federal tax has already been paid.
Review:
- Federal payroll withholding
- Federal withholding from bonuses
- Withholding associated with equity compensation
- Pension or retirement withholding
- Estimated payments
- Prior-year refunds applied to 2026 taxes
Do not assume that because taxes were withheld from each paycheck or bonus, total payments automatically align with the household’s final liability.
The comparison needs to happen at the household level.
3. Check Estimated-Tax Safe Harbor
For 2026, the federal required annual payment generally involves comparing 90% of expected current-year tax with a prior-year safe-harbor amount.
For taxpayers whose 2025 AGI exceeded $150,000, or $75,000 if married filing separately, the prior-year component generally increases to 110% of prior-year tax. (IRS)
Review:
- 2025 AGI
- 2025 total tax
- 2026 expected tax
- Payments already made
- Expected remaining withholding
Remember that satisfying safe harbor generally addresses underpayment-penalty exposure. It does not guarantee that no balance will be due when the tax return is filed.
4. Update Equity-Compensation Assumptions
Equity compensation can change rapidly.
Review:
- RSUs already vested
- RSUs expected to vest before year-end
- Stock price assumptions
- Shares sold
- Cost basis
- Options exercised
- ESPP activity
- Federal withholding on equity compensation
If company stock has appreciated significantly, the dollar value of upcoming vesting may be materially different from estimates made earlier in the year.
5. Review Realized Investment Gains and Losses
Check taxable investment accounts for:
- Short-term gains
- Long-term gains
- Realized losses
- Expected year-end distributions
- Large positions that may be sold
Tax should not necessarily dictate investment decisions, but the tax consequences should generally be understood before a transaction occurs.
Higher-income investors may also need to consider the Net Investment Income Tax. (IRS)
For investors approaching Medicare, realized income may eventually influence IRMAA calculations because Medicare generally uses tax-return income from two years earlier. (Medicare)
6. Check Retirement Contributions
For 2026, the employee 401(k) deferral limit is generally $24,500, plus applicable catch-up contributions.
Eligible participants age 50 and older generally have an $8,000 catch-up limit, while eligible workers ages 60 through 63 may have a higher $11,250 catch-up limit. (IRS)
Certain higher-paid participants are also subject to the new Roth catch-up requirement beginning in 2026.
Review year-to-date contributions before the number of remaining payroll periods becomes limited.
7. Identify Q4 Financial Events Before They Happen
Ask what is likely to occur between October and December.
Examples might include:
- Annual bonus
- RSU vest
- Business distribution
- Major stock sale
- Real-estate transaction
- Charitable contribution
- Retirement contribution
- Required distribution where applicable
- Roth conversion being considered
- Business purchase or sale
- Major deductible expense
Some decisions cannot be reversed after year-end.
Others may require coordination with a CPA, attorney, employer, custodian, or financial advisor before implementation.
A Practical Pre-Q4 Checklist
Before entering Q4, consider confirming:
- Expected 2026 income has been updated
- Bonuses and equity compensation are included
- Realized gains and losses are included
- Federal withholding is current
- Estimated payments are documented
- Safe-harbor assumptions have been reviewed
- Retirement contributions are on track
- Major Q4 transactions have been identified
- Investment decisions have been reviewed for tax implications
- Tax decisions have been considered alongside cash-flow and retirement goals
The checklist does not determine what action any specific taxpayer should take.
Its purpose is to identify areas that may warrant additional analysis before year-end.
How Does Falcon Wealth Planning Approach Pre-Q4 Planning?
Falcon Wealth Planning is a Fee-Only fiduciary Registered Investment Adviser. Our CFP® professionals and CPAs work with clients to coordinate investment management with retirement planning, tax planning, estate considerations, business decisions, and cash flow.
For high-income households with multiple income sources, a pre-Q4 review may provide an opportunity to evaluate those decisions together before the year is nearly complete.
The appropriate planning strategy depends on each family’s circumstances, goals, and tax situation.
Frequently Asked Questions
When should year-end tax planning begin?
There is no single required date. Beginning before the final weeks of December can provide more time to evaluate transactions, compensation, withholding, and other decisions.
What should high earners include in a tax projection?
Relevant items may include salary, bonuses, equity compensation, business income, investment income, capital gains, retirement distributions, withholding, estimated payments, deductions, and credits.
Does satisfying estimated-tax safe harbor mean I will not owe tax?
No. Safe harbor generally addresses underpayment penalties rather than guaranteeing that the final tax return will show no balance due.
Why review retirement contributions before Q4?
Contribution limits, catch-up eligibility, employer-plan rules, payroll timing, cash flow, and the new 2026 Roth catch-up requirements can all affect year-end planning.
Schedule a No-Cost Financial Assessment
Q4 can bring tax, investment, retirement, and compensation decisions together quickly. A No-Cost Financial Assessment can help determine whether Falcon Wealth Planning’s coordinated fee-only fiduciary approach may be appropriate for your family’s financial needs.
Disclosure
This article is provided for general educational and informational purposes only and does not constitute individualized investment, tax, or legal advice. Tax rules and their application depend on individual circumstances. Consult appropriately qualified financial, tax, and legal professionals before implementing any strategy. Falcon Wealth Planning, LLC is a fee-only fiduciary Registered Investment Adviser.
