The holiday season will be ramping up and taxes may be the last thing on your mind. But if you carve out just a little time before December 31st, you could end the year on a stronger financial footing, and maybe even reduce your 2025 tax bill.
Here are 6 tax-smart moves to consider before the ball drops:
Check your withholding:
Did you owe taxes last year or get a large refund? Now’s a good time to use the IRS Withholding Estimator and make adjustments before the last paycheck of the year.
Spend down FSA funds:
Flexible Spending Account balances are use-it-or-lose-it for many plans. Book those exams or stock up on eligible supplies while you still can.
Make your charitable contributions count:
Ensure donations are made, and processed, by December 31. If you’re donating non-cash items or large gifts, make sure you have proper documentation such as a receipt. Make sure you get a written acknowledgment from the charity for contributions of $250.00 or more. Also, make sure that you get a qualified appraisal for any non-cash contribution of $5,000 or more.
Contribute to retirement accounts:
If you haven’t maxed out your 401(k), increasing your contribution before year-end can lower your taxable income.
Offset gains with losses:
Selling underperforming investments before year-end can help reduce capital gains taxes. Talk to a financial advisor to see if this makes sense for you.
Review major life changes:
Marriage, divorce, a new job, or a new dependent can all change your tax picture. Flag these now so you’re not scrambling later.
Taking a few steps now can lead to fewer surprises in April and a much smoother start to the new year. If you don’t currently work with a tax professional, this is a great time to begin that relationship. David A. Santini, CPA, LLC is always happy to answer questions and help you navigate your options before things get hectic in tax season.