Five Reasons Why You Might Need End-Of-Year Tax Planning Now
By Martin A. Federici, Jr., CEO of both
MF Advisers, Inc. and MF Tax & Accounting, Inc.
Let’s get right into the FIVE (5) reasons why end-of-year tax planning might make sense for you!
1. Changing Situations for The Current & Following Years: Personal situations can change from year to year; those same changes can affect your tax situation differently from year to year as well. Strategic acceleration of certain deductions can shift tax liability to years with lower marginal rates (ex: the IRS raised the SALT cap to $40,400 for tax years 2026 through 2029) helping you pay less in taxes.
2. Capital Loss Harvesting: Selling underperforming investments in your taxable brokerage accounts allows you to offset capital gains and deduct up to $3,000 of net losses against ordinary income, reducing your current year’s tax bill. Is your advisor or financial team actively keeping an eye out for things like this for you? If not, contact us!
3. Retirement Contribution Maximization: Increasing contributions to 401(k)s, IRAs, or HSA accounts before year-end could lower taxable income, with catch-up contributions available for ages 50 & up. Roth IRA contributions wouldn’t decrease your current year’s income, but these can help grow a pot of tax-free money for later in retirement (and before that in certain circumstances).
4. Avoiding Unexpected Current Year Underpayments: Why do this in the later 3rd QTR/early 4th QTR of the current tax year? It’s a great idea to make sure nothing unexpected happened in the current year that you didn’t realize (imagine having NO federal taxes withheld all year on your W-2 income?! – seen this happen to more than a couple of people through the years).
5. Business Expenses and Depreciation Strategies: Business owners can utilize 100% first-year bonus depreciation for qualifying assets and prepay expenses under the 12-month rule to reduce current taxable income, while avoiding depreciation recapture risks by timing asset sales. Big business purchases/sales before the end of the year/beginning of the next year might make sense depending on what’s happened & is going to happen so make sure to plan accordingly.
It’s a smart idea to plan & execute your financial strategy (with the guidance of your trusted tax/financial advisors) for the current and following year so you’re in control of your financial situation. Not everyone needs to do it, but a simple check on some basic things like the ones mentioned above can make the difference between paying more in taxes that you need to (over your lifetime) & paying the least amount you should (no one wants to pay more in taxes than they should)….you’re welcome!
Do you have end-of-year tax questions? Let's tackle them together before time runs out. Book your tax planning session/financial review with us today!
Find an experienced team who always operates in a fiduciary capacity for clients, doesn’t work on commissions, and—most importantly—has the hearts and demeanors of a teacher, not a salesman.
For more information, please email marty@mfadvisers.com (PA), matt@mfadvisers.com (FL), or call (570) 760-6524 (PA) or (561) 329-1296 (FL).
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