Year-End Tax Reminders: What to Do Before December 31

As the year winds down, a handful of tax-related moves have December 31 deadlines. This article provides a list of what to think about and prioritize between now and the end of the year. It is for general informational purposes and is not tax or legal advice.  

RETIREMENT ACCOUNTS

401(k)/403(b) Plan Contributions

Salary deferrals into employer retirement plans must be made through payroll by December 31. If you want to max out or increase contributions, check your final pay date and submit any election changes now — some employers need lead time to process payroll changes.

Solo 401(k) Plan Contributions

The employee salary deferral portion of your contribution (see contribution limits above) should be made by December 31. The employer contribution (up to 25% of net earnings) can be calculated as part of your tax preparations and can be deposited into your account up until the tax filing deadline.

Roth Catch-up for Higher Earners 

If your 2025 FICA wages with your current employer exceeded $150,000, any catch-up contributions for those age 50+ must be Roth, not pre-tax, starting this year. Please see our other article on this with additional details. You’ll want to confirm your plan is coding this correctly before your last paycheck.

Backdoor Roth IRAs

If your income is above the limits to contribute directly to a Roth IRA ($168,000 for single filers, $252,000 for married filing jointly), and you have no assets currently in an IRA account (meaning all your pre-tax retirement savings are in a 401(k) or 403(b) plan), a backdoor Roth contribution is something to consider. If you are interested, please reach out and we can talk through the details. These contributions must be completed before year-end to count for 2026.

Roth Conversions 

If you're converting traditional IRA or 401(k) funds to Roth this year, the conversion must be completed by December 31 to count for the 2026 tax year. This is also a good time to evaluate whether a conversion makes sense given your income this year.

Note: Contributions to a Roth IRA are different from a Roth conversion. Contributions can be made until the tax filing deadline next spring, so there's no year-end rush on those.

Required Minimum Distributions (RMDs)

If you're 73 or older (or you've inherited an IRA subject to RMD rules), your distribution must be taken by December 31 or you may face a penalty of up to 25% on the RMD amount. You’ll be hearing from us soon if you have not yet taken your RMD yet for this year, but please don’t hesitate to reach out with any questions.

INVESTMENTS AND GIVING

Tax-Loss Harvesting

This is a good time to check for unrealized losses in your accounts. If you have investment losses and want to use them to offset realized gains, those trades will need to be placed prior to December 31. Keep the wash sale rule in mind – you can’t repurchase the same or a substantially identical security within 30 days before or after the sale, or the loss will be disallowed. We are proactively looking at opportunities within your account(s), but please reach out if you’d like to review this in more detail.

Charitable Giving

Donations must be made by December 31 to count for this year's deduction. A few options worth considering:

• For those who itemize, only charitable contributions that exceed 0.5% of your Adjusted Gross Income (AGI) are deductible, starting in 2026.

• Get tax receipts for all donated items, including clothes and household goods, and use something like the Salvation Army’s Donation Value Guide to estimate the value of the goods to add to itemized deductions. These can add up!

  • Donations under $250: Keep a receipt from the charity with their name, date, and a description of the items, plus your own written list

  • Donations over $250: You need a contemporaneous written acknowledgment from the charity stating whether you received any goods or services in exchange.

  • If your total Non-Cash Contributions are over $500: You must file IRS Form 8283 with your federal tax return

• Qualified Charitable Distributions (QCDs): If you're 70½ or older, you can donate directly from an IRA (up to $111,000 per individual) and have it count toward your RMD without being added to taxable income.

• Bunching donations into a single year (if you're close to the standard deduction or 0.5% AGI thresholds) can help maximize itemized deductions.

Annual Gift Tax Exclusion

You can gift up to the annual exclusion amount per recipient ($19,000 in 2026) without using any of your lifetime estate/gift tax exemption or filing a gift tax return. This resets January 1, so unused exclusion doesn't carry over.

SPENDING ACCOUNTS & ESTIMATED TAX PAYMENTS

Health Savings Account (HSA) Contributions

HSA contributions can be made until the tax filing deadline, not December 31, but it's still worth confirming you're on track to hit your annual limit, especially if you want the full deduction for this tax year.

Flexible Spending Account (FSA)

Most FSAs are "use it or lose it". Check your plan for the spending deadline, some plans offer a grace period into mid-March or allow a small carryover, but most don't. Review your remaining balance and schedule any eligible expenses (medical, dental, vision) now.

Estimated Tax Payments

If you pay quarterly estimated taxes, the Q4 payment is due January 15 (not December 31). To avoid an underpayment penalty, you should review your total withholding and payments now, especially if your income changed significantly this year (bonus, stock sales, self-employment income). If you have questions, don’t hesitate to reach out to us.

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This article is for general informational purposes and isn't tax or legal advice. Deadlines, limits, and rules can vary based on individual circumstances. Please reach out with any questions or consult your tax advisor to confirm what applies to your situation.