Most of what decides your April tax bill is already locked in by the time you file. The good news is that the last few weeks of the year are when you still have room to act.
1. Top off your retirement accounts
Adding to a 401(k), IRA or SEP-IRA before the year ends reduces your taxable income dollar for dollar in many cases. Confirm where you stand against the contribution limits before December.
2. Harvest investment losses
Selling investments that have lost value before December 31 lets you use those losses to offset gains you have already realized this year. After offsetting gains, you can apply up to $3,000 against ordinary income, with any remaining amount carrying forward.
3. Bunch your deductions
If your deductions are close to the standard deduction threshold, moving planned charitable gifts or medical expenses into this year rather than next can push you over in one year, which reduces your taxable income more than the split-year approach would.
4. Review your withholding and estimates
If you have had a higher-income year than expected, check whether your withholding or estimated payments are on track. Underpaying by a significant amount can result in a penalty, and the closer you are to year-end, the fewer options you have to correct it.
What applies to your situation depends on your income, filing status and what has already happened this year. If you want to run through your specific numbers before the year closes, we are glad to help.