Year-End Tax Planning Checklist (December Moves That Save Money)

Max out tax-advantaged retirement

• 401(k): $23,000 (under 50) / $30,500 (50+) — must be deducted from paycheck by 12/31
• HSA: $4,150 single / $8,300 family — deadline is April 15
• IRA / Roth: $7,000 / $8,000 — also April 15 deadline, but contribute early to compound

Tax-loss harvest before December 31

Sell underwater positions to realize losses. Offset gains + up to $3,000 ordinary income. Mind the wash-sale rule. Settlement date matters — make trades by the last trading day of the year.

Charitable giving

• Cash gifts to qualifying charities by 12/31
• Appreciated stock instead of cash — skip capital gains tax AND deduct fair market value
• Donor-advised fund for bunching — front-load multiple years of giving in one tax year
• QCD if you're 70½+ — direct IRA-to-charity transfer counts toward RMD, doesn't hit AGI

Fix your withholding

Looking at a big underpayment? Submit a new W-4 with Step 4c extra withholding for the last paycheck or two. Withholding is treated as paid evenly throughout the year — unlike estimates, this can cure under-withholding penalties retroactively.

Use up FSA dollars

Health FSAs are use-it-or-lose-it (some plans allow $640 carryover or 2.5-month grace period — check yours). Stock up on glasses, contacts, dental work, prescriptions before year-end.

Roth conversion in low-income years

Between jobs? Early retirement before SS and RMDs? Convert traditional IRA dollars to Roth at low brackets now to avoid higher rates later. Must complete the conversion by 12/31.

Defer or accelerate income

• Self-employed: defer December invoicing into January (lower this year's income) or accelerate (lock in this year's rate before law changes)
• Equity comp: time RSU/ESPP sales around brackets
• Bonuses: ask employer to defer to January if available

State-specific year-end moves

Pay Q4 state estimated tax in December (instead of January) to itemize the SALT deduction this year — capped at $10K combined. PTET elections for business owners often have December deadlines.