December has a way of sneaking up on all of us.
But when it comes to tax planning strategies, many of the decisions that may help reduce your tax liability need to happen before December 31, not after. Once the calendar flips to a new year, most of your options for the prior year disappear.
Here are the areas worth reviewing now, while there’s still time to act.
This does not have to mean overhauling your entire financial life. In many cases, it comes down to a handful of focused decisions, made with enough lead time to follow through on them.
Why Year-End Is Prime Time for Tax Planning
Most tax planning is reactive. You file in the spring, see the number, and think about what you’d do differently next time.
Year end tax planning flips that around. It’s the window where you can still influence this year’s outcome, not just react to it. A few weeks of attention now may give you more options before filing season arrives.
Retirement Account Strategies Worth a Second Look
Retirement accounts can be an important part of year-end tax planning, and many people don’t revisit them before the end of the year:
- Review your 401(k) contributions if you haven’t already hit the annual limit
- Consider whether a backdoor Roth conversion if your income is too high for direct Roth contributions
- Business owners: revisit SEP IRA or Solo 401(k) contributions before applicable deadlines
- If you’re 73 or older, confirm whether your required minimum distribution has been taken
Each of these has its own rules and deadlines, so timing matters as much as the strategy itself.
Charitable Giving Strategies That Do Double Duty
If giving is already part of your life, a few planning adjustments may make it more tax-efficient without changing the amount you intend to give:
- Donating appreciated stock instead of cash, to avoid capital gains tax
- Using a donor-advised fund to “bunch” multiple years of giving into one tax year
- Qualified charitable distributions from an IRA if you’re 70½ or older
These strategies work best when they’re planned ahead of time, not decided on December 30th.
Tax-Loss Harvesting and Portfolio Rebalancing
Year-end is also a natural point to look at your portfolio through a tax lens.
Tax-loss harvesting (selling investments at a loss to offset gains elsewhere) may help offset gains elsewhere, but it should be coordinated with your overall financial plan and handled with attention to rules such as wash-sale limitations. It’s also a good time to rebalance, since a review of gains and losses is already underway.
Business Owner Considerations Before Year-End
If you own a business, year-end tax planning has a few extra layers worth reviewing alongside your personal return:
- Equipment or software purchases that may qualify for accelerated depreciation this year
- Year-end bonuses or profit distributions, and how their timing affects both business and personal taxes
- Retirement plan contributions for yourself and any employees, which often have earlier deadlines than personal filing
- Entity structure, since S-corp, LLC, and sole proprietor setups are each taxed differently
Some of these decisions may need to happen before December 31, and they are often easier to evaluate with a few weeks of runway instead of a few days.
A Few More Tax Planning Strategies Worth Reviewing
Depending on your situation, it’s also worth a look at:
- Timing income and deductions if you’re near the edge of a tax bracket
- Health Savings Account contributions, if you’re enrolled in a high-deductible plan
- Any changes in tax law for the current year that may affect deductions or credits you normally claim
Tax strategies that worked well last year don’t always carry over cleanly, so an annual check-in matters.
Coordinating Your CPA and Financial Advisor
The biggest missed opportunities in tax planning strategies usually don’t come from one bad decision. They come from timing, missing information, or a lack of coordination. When your CPA and financial advisor are not looking at the same picture before year-end, planning opportunities can be easier to miss.
A few questions worth asking before year-end:
- Does your CPA know about any large financial moves you made this year, like a business sale or a big withdrawal?
- Does your financial advisor know about upcoming changes to your income or filing status?
- Has anyone looked at your full picture together, rather than each person only seeing their piece?
We keep a running checklist for clients on our resources page, but a short conversation between your CPA and advisor before December 31 may uncover planning items a checklist alone could miss.
Don’t Wait Until December 31
The best tax planning strategies take a little lead time to execute properly. Waiting until the last week of the year usually means missing options that needed a few weeks (or a phone call to your CPA) to put in place.
If it’s been a while since your tax and financial plans were reviewed together, now is a good time to change that.
Want a second set of eyes on your year-end tax planning? Contact our team before the calendar runs out.
This material is provided for informational purposes only and does not constitute tax, legal, or accounting advice. Searcy Financial Services, Inc. does not provide tax, legal, or accounting advice. This material has not been prepared to address the specific needs of any individual or entity and should not be relied upon for tax, legal, or accounting purposes. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.