Finance & AccountingFree
Year End Tax Package for Your CPA
Your trial balance already contains the adjustments your CPA is going to make. Pull them out, price them, and the follow-up rounds stop.
Nobody sends the CPA four rounds of email because they forgot the bank statements. Round one is the document list and it usually goes out complete. Rounds two through four are questions about accounts: what is the 27,315 in Ask My Accountant, is Due from Shareholder a loan or a distribution, which part of Accrued Expenses is the bonus. Those are not missing documents. They are balances nobody can classify from the account name, and a generic checklist has no line for them.
So the package gets built off the trial balance rather than off a checklist. Every account whose balance a preparer could not explain from its name gets a question written for it, and each question travels with the specific document that closes it. The trial balance normalizer is where the mapping lives if the chart itself is the problem, and inbound K-1s and 1099s come in through their own intake rather than this one. A client also claiming the research credit needs its own substantiation record before Section G gets filled in.
The second move is the one nobody makes. The same trial balance already contains the book-to-tax adjustments, so extract them and build the reconciliation yourself. Meals are capped at fifty percent. Penalties paid to a government are not deductible at all. Life insurance premiums where the company is the beneficiary are disallowed. Doing this before the CPA does answers most of round three, and it tells the owners their own taxable income in January rather than in April.
The net looked like nothing
Merriwether Coating Systems, a fictional industrial coating shop taxed as an S corporation, closed FY2026 with 612,340 of book net income and 218 accounts in its chart. Nine of those accounts carried balances a preparer could not classify from the name, holding 331,792 between them. The largest was a single Accrued Expenses line of 171,400, which turned out to contain two shareholder bonuses and the vacation accrual for everybody else, and those three pieces get three different answers.
Both bonuses were accrued on 31 December and paid on 14 March, so both deductions moved to 2027. The 95,000 to the 55 percent holder is the version everybody knows. The 30,000 to the 18 percent holder is the one that surprises people, because for an S corporation the related-party test has no ownership threshold. The 46,400 of vacation, paid two weeks earlier to employees who own no stock, stayed deductible in 2026. Stock ownership decided it, not the date.
Assembled, ordinary business income came to 623,020 against 612,340 of book income. A difference of 10,680, or 1.74 percent, which looks like a rounding issue and is the net of 319,680 of adjustments running both ways. The 55 percent holder's share of the bonus addback alone is 68,750, carrying 25,437.50 of federal tax at 37 percent on income the company deducts next year and pays out next year too. Nobody had reserved for it.
How it works
Load the request list
Their exact wording, including anything added by email after the formal list went out
Read the trial balance
Every account flagged where the balance cannot be explained from the account name alone
Build the reconciliation
Book to tax from the ledger itself, with the code section behind each adjustment named
Send it once
One package with the answers, the documents and the reconciliation, plus who owes what
What it does
- Reads the trial balance for balances a preparer cannot classify from the account name
- Writes the question and names the document that closes it, one pair per account
- Extracts the book-to-tax adjustments already sitting in the ledger and shows the arithmetic
- Flags accrued amounts payable to any shareholder, which for an S corporation have no threshold
- Restates the CPA's own request wording beside where each item actually lives in your records
- Gives the owners a taxable income figure in January instead of an April surprise
Common questions
Why build the book-to-tax reconciliation ourselves? That is what we pay the CPA for.
You are not replacing it, you are removing the question rounds from it. The adjustments come off accounts you already own, so the ones you can identify are answered before anybody asks. What comes back is a preparer reviewing your arithmetic instead of interviewing you about it, and you get a taxable income figure early enough to matter for estimates.
Is the accrued bonus rule really different for an S corporation?
Yes, and this is the most commonly missed item on the list. Section 267 normally reaches an individual owning more than half the stock, but its pass-thru rule treats any person owning any stock of an S corporation as related. So an accrual payable to a small minority holder is deductible only when it becomes includible in their income, which for a cash-basis individual means when paid.
Our vacation accrual was paid in the same window. Why is that treated differently?
Because the employees own no stock. Once the related-party rule is out of the picture, an accrual paid shortly after year end can be deductible in the accrual year under the ordinary timing rules. The deciding fact is not the payment date, it is whether the payee holds shares, which is why the two halves of one accrual account get opposite answers.
What actually goes on the request list side of the sheet?
Their wording, verbatim, in the left column, and where the item really lives in the right. A request for the fixed asset roll-forward is your depreciation schedule plus the invoices for the additions. Keeping their language intact is what stops the reply that says you already sent it and gets a different document back instead.
Does it handle the accounts that should not have a balance at all?
Those get flagged first, because they are pure signal. Opening Balance Equity is a conversion artifact and should be zero. A debit balance in accounts payable is a prepayment, a duplicate payment or an unapplied credit. Undeposited Funds is either cash genuinely in transit at year end or a posting error, and only the bank statement settles which.
What about sales tax, payroll and the other filings?
The trial balance liability accounts get tied to the returns actually filed, which is usually where a variance surfaces. Where the mismatch is a nexus question rather than an arithmetic one, the nexus review is the right next step, and the filing calendar keeps the dates from arriving as surprises.
Is this tax advice?
No. It is a preparation package that names the code section behind each adjustment so your preparer can agree or disagree with a specific line. Positions on anything genuinely uncertain are flagged for them rather than taken. If a notice has already arrived about a prior year, answering it is a separate job that comes first.
Year End Tax Package for Your CPA
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