As the calendar year draws to a close, it is easy for tax-related tasks to get pushed behind holiday plans and other priorities. Still, this is an important time to look at your personal tax picture and identify planning steps that may no longer be available once the year changes.

Tax filing season may not have arrived yet, but a thoughtful review now can reduce uncertainty later. It may help you avoid an unexpected balance due, make better use of available tax-saving opportunities, and enter the new year more organized. Whether your income, family, investments, or expenses changed this year, year-end tax planning deserves attention.

Check Your Withholding and Estimated Payments

Tax withholding should reflect your current circumstances, but many events during the year can affect what you owe. Starting a new position, receiving a raise, retiring, earning investment income, working for yourself, or experiencing a family change can all alter your tax situation.

When too little is withheld from your paycheck, you may face a tax bill when you file your return. On the other hand, excessive withholding means more of your money was sent to the IRS throughout the year than may have been necessary.

It is also wise to revisit estimated tax payments if you receive income without withholding. This can include self-employment earnings, rental income, investment income, or retirement income. Falling short on estimated payments can result in a remaining tax balance and potential penalties, so a review may help determine whether an additional payment is appropriate before year-end or before the last estimated-payment deadline.

Review Retirement Plan Contributions

The final pay periods of the year are a practical time to assess retirement savings. Contributions to workplace plans, including 401(k) and 403(b) accounts, generally need to be made through payroll deductions before the end of the year.

Increasing contributions for the paychecks that remain may reduce taxable income while adding to your retirement savings. It is also worth confirming that you are contributing enough to receive any employer match that is available to you.

A Roth IRA conversion may also be worth evaluating for some individuals. A conversion generally creates taxable income in the year it takes place, but qualified Roth IRA withdrawals in the future can be tax-free. Because the value of this approach depends on the person’s broader tax circumstances, it should be considered carefully as part of an individualized tax plan.

Use Health Savings and Flexible Spending Accounts Wisely

If you are enrolled in a qualifying high-deductible health plan, a Health Savings Account, or HSA, may provide meaningful tax advantages. Eligible contributions may be deductible, account earnings can grow tax-deferred, and withdrawals for qualified medical expenses are generally tax-free.

If you have not yet reached your available contribution limit, review whether there is still time to contribute more before the applicable deadline. An HSA can be a useful part of both current tax planning and longer-term healthcare planning.

Flexible Spending Accounts, or FSAs, deserve a review as well. Many plans include use-it-or-lose-it provisions, which can mean unused funds are forfeited if they are not used within the timeframe allowed by the plan. Since plan rules can vary by employer, checking the account balance now may help prevent money from going unused. Open enrollment can also be a good opportunity to confirm that your FSA election still suits your household’s needs.

Consider Investments and Income Timing

Individuals with investments that declined in value may want to consider tax-loss harvesting. Selling an investment at a loss may allow that loss to offset capital gains. In certain situations, excess losses can also offset a limited amount of ordinary income.

Investment decisions should remain connected to your long-term financial objectives, rather than taxes alone. It is also important to understand IRS wash-sale rules, which can limit the anticipated tax result when substantially similar investments are repurchased too soon.

The timing of income and deductible expenses can matter, too. Depending on your situation, accelerating deductions or postponing income until the following year could be beneficial. In other cases, recognizing income sooner or delaying deductions may make more sense. The right approach depends on your individual tax position and should be reviewed in context.

Organize Charitable Contributions

Charitable giving is often a priority near the end of the year, and planning ahead can help you understand the possible tax implications. If you intend to make gifts, retain receipts and written acknowledgments for each contribution.

Some taxpayers may want to explore giving appreciated securities rather than cash. Others may benefit from grouping multiple years of charitable gifts into one year when they itemize deductions. The value of either strategy will vary based on the individual’s circumstances.

If you would like a donation included on this year’s tax return, make sure the gift is completed by year-end. Keeping clear documentation can also make tax preparation more efficient when filing season begins.

Complete Required Minimum Distributions

If you are required to take Required Minimum Distributions, or RMDs, be sure they are completed before the year ends. Missing an RMD can lead to penalties, making this a key year-end item for retirees to address.

For individuals who would prefer to direct some of those funds to charity, a Qualified Charitable Distribution, or QCD, may be an option. Eligible taxpayers can send charitable gifts directly from an IRA, potentially satisfying all or part of an RMD while receiving favorable tax treatment.

Prepare Your Records Before Tax Season

Year-end is also a helpful time to look at 529 education savings plan contributions. Certain states provide tax benefits for qualifying contributions, and even modest additions can support education savings over time.

Start gathering tax documents before January whenever possible. Useful records may include charitable gift acknowledgments, mortgage interest statements, property tax information, investment records, childcare expense documentation, self-employment income details, and medical expense records. Early organization can make tax preparation less stressful and reduce the chance that deductions or credits are missed.

The last weeks of the year tend to pass quickly, and many tax planning opportunities expire when the calendar turns. Reviewing withholding, retirement contributions, health accounts, investments, charitable gifts, required distributions, education savings, and tax records can make the coming tax season smoother and help limit surprises.

Lighthouse Advisors provides personalized tax planning and tax preparation support for individuals in Minneapolis, the Brainerd area, including Baxter, and Salt Lake City. If you would like help reviewing your year-end tax situation, our team can help you evaluate the opportunities that may still be available before the year ends.