By the time you file in April, your tax bill is mostly history — the return just reports it. The moves that actually change the number happen before the year ends. Here’s the checklist we walk through with clients every November and December.
Why December matters more than April
Nearly every meaningful lever — retirement contributions through your employer, charitable gifts, capital loss harvesting, income timing — is measured by the calendar year. Once the ball drops, options collapse to a short list (IRA and HSA contributions being the notable stragglers, allowed until April 15). Planning in December is playing the game; planning in April is reading the box score.
Max the tax-advantaged accounts
- 401(k) deferrals must be in by December 31 — if you’re not on pace to hit the annual limit, adjust your final paychecks now. Catch-up contributions add substantial room if you’re 50 or older.
- HSA contributions are the quiet superstar: deductible in, tax-free growth, tax-free out for medical costs. You have until April 15, but budgeting it now is easier.
- Traditional or Roth IRA — also open until April 15, but December is when to decide which, because that choice depends on this year’s bracket versus your future one.
Harvest losses (mind the wash sale)
Investments sitting at a loss in taxable accounts can be sold to offset realized gains — plus up to $3,000 against ordinary income, with the excess carried forward. The catch is the wash sale rule: buy the same (or substantially identical) security within 30 days before or after the sale and the loss is disallowed. Harvest into a similar-but-not-identical holding and you stay invested while banking the loss.
Give strategically
Charitable gifts completed by December 31 count for this year — and how you give matters as much as how much:
- Appreciated stock beats cash: you deduct full market value and nobody ever pays the capital gains tax.
- Bunching concentrates two or three years of giving into one — often via a donor-advised fund — pushing you past the standard deduction in the bunched year while the fund distributes to charities on your normal schedule.
- Qualified charitable distributions let IRA owners 70½+ give directly from the IRA — satisfying RMDs without the income ever touching the return.
Time income and deductions
The bracket you’ll be in next year is a planning input, not a mystery. Shift income toward the cheaper year and deductions toward the expensive one.
Expecting a lower-income year ahead? Defer the year-end invoice, the bonus, the Roth conversion into January. Expecting higher? Accelerate income into now and hold deductions for next year. Self-employed taxpayers have the most control here — invoice timing, equipment purchases, and retirement plan funding are all movable pieces.
Don’t forget the RMD
If you’re 73 or older (or hold certain inherited IRAs), your required minimum distribution must be out by December 31 — the penalty for shortfalls is among the steepest in the code. Custodians get busy in late December; don’t leave it for the 28th.
A December-proof calendar
The failure mode of year-end planning isn’t bad ideas — it’s November passing in a blur. Our clients get a projection in the fall: here’s the bracket you’re landing in, here are the three moves worth making, here are the deadlines. Then December is execution, not scramble. Book a year-end planning session — the best time is before Thanksgiving; the second-best time is today.
