As December rolls in, tax season might seem like a distant worry—but now is the perfect time to take proactive steps to optimize your tax strategy. Leveraging your financial advisor’s expertise now can help you make smarter decisions and save more when tax day arrives.
Here are some top tips from our experts to help you prepare before the year ends:
- Max Out Your Retirement Contributions
Boost your savings and lower your taxable income by contributing as much as possible to retirement accounts like your 401(k) before the end of the year. Check your plan’s contribution limits and rules to ensure you’re making the most of your options. If you have a traditional IRA, consider making contributions now to potentially qualify for additional tax deductions.
For those with a Flexible Spending Account (FSA), remember the “use it or lose it” policy. Review your balance and spend wisely on eligible expenses before the year ends. Some employers offer a grace period extending into the new year, but it’s always better to plan ahead.
- Defer Your Income When Possible
If you’re expecting a raise, year-end bonus, or commission that could push you into a higher tax bracket, consider deferring it until 2025 if your employer allows it. Similarly, delay selling investments or issuing invoices until January to keep your 2024 taxable income as low as possible. Discuss these options with your financial advisor to ensure they align with your broader financial plan.
- Embrace the Spirit of Giving
The holiday season is the perfect time to give back—and charitable contributions can also reduce your taxable income. Whether it’s cash donations, stocks, vehicles, or other items, be sure to document your contributions with receipts or valuations. Donations made before December 31 are eligible for tax deductions this year. Speak with your advisor about tax-smart strategies for giving, such as donating appreciated securities or establishing a donor-advised fund.
- Review Your Year and Set Goals for 2025
The end of the year is ideal for a financial checkup. Evaluate your financial performance for 2024 and set clear goals for 2025. A professional financial advisor can help you create a customized plan that covers taxes, retirement, investments, and more.
Don’t wait until April to start planning for your taxes—take action now to maximize savings and start the new year with confidence. Find a trusted financial advisor today and make this tax season your most stress-free yet! Find a financial advisor to build a custom plan for taxes and beyond by perusing our directory!
