Most tax savings don't disappear because a partner made a bad decision. They disappear because the decision was never made at all — the window simply closed while everyone was focused on billable hours instead of the calendar.
For a W-2 employee, that risk barely exists. Withholding adjusts automatically, and there's little to actively decide before year-end. For a law firm partner, paid through guaranteed payments, distributions, or a K-1 that won't be finalized until months later, several of the moves that actually reduce a tax bill have hard December 31 deadlines rather than the usual flexibility of tax season. One of the more interesting ones: a retirement contribution made before year-end can, in some cases, restore a QBI deduction a high-earning partner assumed was already gone.
Below are four decisions that stop being decisions once the calendar turns, organized around what's specific to how law firm partners are paid and own their firms — not a generic small-business checklist.
Confirm your Q4 estimated PTET payment, if applicable. For firms that elected into a state's pass-through entity tax regime, the fourth-quarter estimated payment (December 15 in New York) is generally the last checkpoint of the year to true up that payment against actual income. The election itself is typically a spring decision; by December, the only open question is whether the payment already scheduled matches reality.
Review, don't simply reset, reasonable compensation for S corporation partners. If firm income came in meaningfully higher or lower than projected, it may be worth reviewing whether a partner's W-2 salary still reflects reasonable compensation for their role, since this affects self-employment tax exposure and retirement plan contribution capacity alike. This is a review to run with your CPA rather than a dial to freely adjust at year-end; reasonable compensation is a facts-and-circumstances standard, not a number a firm can simply pick to optimize taxes.
Start the conversation about next year's entity structure now, if it's on the table. Firms considering an S election, a change in partner mix, or a shift in how compensation is structured for the coming year typically need to have that conversation well before the new tax year begins, not scramble into it in January.
Key Takeaway: A partner's reasonable compensation isn't a lever to pull at year-end for tax savings — it's a standard to periodically test against actual duties and market comparables, and December is simply a good time to have that conversation before payroll for the year closes out.
Check plan establishment deadlines against funding deadlines — they aren't the same date. This distinction matters most for cash balance and other defined benefit plans, which generally need to be established by December 31 of the year a partner wants the deduction, even though the plan can often be funded up until the tax filing deadline, including extensions.
Model whether a contribution could affect your QBI position. Because law firms are typically treated as a Specified Service Trade or Business, the QBI deduction phases out above certain income levels, and a strong fourth quarter can move a partner into that range without anyone noticing until the return is prepared. There's still time before year-end to run the numbers on whether a retirement contribution could help, a topic we've covered in more detail in QBI Adjustment for Retirement Plan Deductions.
Key Takeaway: Missing December 31 for a retirement plan usually isn't about missing a contribution — contributions often have months of runway left. It's about missing the opportunity to establish the plan in the first place, which is the deadline that doesn't bend.
Review capital gains and losses across the year. If a partner or the firm holds investments outside qualified retirement accounts, year-end is the time to look at realized gains and consider whether harvesting losses elsewhere in the portfolio could offset them; the two only net against each other within the same tax year.
Consider donating appreciated securities rather than cash, if charitable giving is part of the plan. Doing so before December 31 can allow a partner to avoid recognizing the capital gain while still claiming a deduction for the full value, but the contribution has to be completed by year-end to count for the year being planned around.
Finalize any planned expenditures already built into this year's tax projections. Section 179 expensing and bonus depreciation generally require an asset to be placed in service by year-end, not just ordered or invoiced — a detail that matters if a firm has been counting on that deduction as part of its year-end number.
Key Takeaway: The tax benefit of a capital loss, a charitable gift of appreciated stock, or a technology purchase all depend on the same thing — completion before December 31 — which is a lower bar than most partners assume until they're the ones missing it.
Several items that only apply to partners, rather than to a business generally, are worth a look before year-end:
Key Takeaway: These balances rarely cause a problem in the year they're created — they cause a problem years later, when a partner is retiring, departing, or being admitted and the firm discovers the numbers were never reconciled along the way.
None of these four decisions exist in isolation. A compensation review can affect retirement plan capacity. Retirement plan decisions can affect QBI eligibility. Capital account balances influence how a future buyout gets calculated. That's exactly why a short, structured review before December 31 tends to be worth far more than the time it takes.
At Revonary, we walk law firm partners through these four decisions each year using their actual numbers rather than a generic template, catching what's specific to their entity structure, compensation, and partnership agreement before the window to act on any of it closes.
Contact a Revonary advisor today to schedule a year-end review before December 31.