Do Not Wait Until April
The most effective tax planning happens before the year ends, not when you are preparing your return. Here are essential strategies to implement before December 31st.
Income Timing Strategies
Defer Income
If you expect to be in a lower tax bracket next year:
- Delay invoicing clients until January
- Postpone year-end bonuses (if possible)
- Wait to exercise stock options
Accelerate Income
If you expect higher taxes next year:
- Bill and collect before year-end
- Take bonuses in December
- Consider Roth conversions
Deduction Strategies
Bunch Itemized Deductions
Alternate years between standard and itemized deductions:
High-Deduction Year:
- Prepay property taxes
- Prepay state estimated taxes
- Make January mortgage payment in December
- Concentrate charitable giving
Standard Deduction Year:
- Minimize deductible expenses
- Delay charitable contributions
Charitable Giving Strategies
Donor-Advised Fund (DAF)
- Get immediate deduction
- Distribute to charities over time
- Ideal for bunching strategy
Qualified Charitable Distribution (QCD)
- Age 70.5 or older
- Up to $105,000 from IRA
- Counts toward RMD
- Excluded from taxable income
Retirement Account Optimization
Maximize Contributions
- 401(k): $23,000 ($30,500 if 50+)
- IRA: $7,000 ($8,000 if 50+)
- HSA: $4,150 individual / $8,300 family
Roth Conversion Considerations
- Convert in low-income years
- Stay below higher tax brackets
- Consider future tax rates
Investment Tax Strategies
Tax-Loss Harvesting
- Sell losing investments
- Offset capital gains
- Deduct up to $3,000 against ordinary income
- Watch the wash-sale rule (30 days)
Capital Gains Planning
- Hold investments over 1 year for long-term rates
- Consider opportunity zone investments
- Donate appreciated securities
Business Owner Strategies
Section 179 Deduction
- Deduct full cost of qualifying equipment
- Maximum deduction: $1,160,000 (2025)
- Must be placed in service by year-end
Qualified Business Income (QBI)
- 20% deduction for pass-through income
- Income phase-outs apply
- Strategies to maximize:
- Maximize W-2 wages
- Increase depreciable property
Year-End Checklist
By December 31st:
- Max out retirement contributions
- Make charitable donations
- Harvest tax losses
- Review estimated tax payments
- Use remaining FSA/HSA funds
- Take required distributions
Gather Documents:
- W-2s and 1099s
- Investment statements
- Charitable receipts
- Medical expense records
- Business expense receipts
Get Year-End Planning Help
Do not leave money on the table. Contact Tax Genius LLC for personalized year-end tax planning strategies.