December feels like it arrives in about fifteen minutes, doesn’t it? One day you’re planning a summer vacation, and then suddenly everyone’s talking about holiday parties and tax deadlines. Your mailbox starts filling up with year-end statements, and that familiar question pops into your head: Did I do everything I could have done this year?
Here’s what most people don’t realize. Those last few weeks of December hold more tax-saving power than almost any other time of year. You’ve got options sitting right there, waiting for you to grab them. Some take five minutes. Others require a bit more planning, sure, but they’re all doable.
Think of this as your personal roadmap for wrapping up the year without leaving money on the table. Because that’s exactly what happens when you skip these steps—you’re basically handing over more to the IRS than you need to. Let’s make sure that doesn’t happen.
Year-End Tax Planning Checklist and Guide
These strategies work best when you tackle them before December 31st, though a few have deadlines that stretch into the new year. Either way, the sooner you start, the more control you have over your tax situation.
1. Max Out Retirement Contributions Before December 31
Your 401(k) contributions need to go in before the calendar flips. That’s it. That’s the deadline.
Check your most recent paystub right now. How much have you contributed so far? For 2024, you can put in up to $23,000 if you’re under 50, or $30,500 if you’re 50 or older. Every dollar you contribute comes straight off your taxable income (assuming you’re using a traditional 401(k), not a Roth). So if you’re in the 24% tax bracket and you manage to squeeze in another $5,000 before year-end, you just saved yourself $1,200 in federal taxes. That’s real money.
Call your HR department or log into your benefits portal. Ask them to increase your contribution percentage for your remaining paychecks. Yes, it’ll make those last checks smaller, but you were going to pay that money in taxes anyway. This way, you’re keeping it for your future instead.
A quick note about IRAs: You actually have until April 15, 2025, to contribute for the 2024 tax year. The limit is $7,000, or $8,000 if you’re 50 or older. Still, there’s something to be said for getting it done now while you’re thinking about it. Your January self will thank you for not having one more thing on the to-do list.
2. Harvest Your Investment Losses (and Wins)
This one trips people up because it sounds complicated. It’s not.
Tax-loss harvesting just means selling investments that have gone down in value to offset the gains from investments that went up. Let’s say you sold some stock earlier in the year and made a $10,000 profit. Great! But you owe taxes on that gain. Now look through your portfolio. Is anything sitting at a loss? If you’ve got another stock that’s down $10,000, selling it before December 31 wipes out the tax bill on your gain.
But here’s where it gets even better. If your losses exceed your gains, you can use up to $3,000 of those losses to offset your regular income. The rest carries forward to future years. So you’re not losing anything by doing this—you’re just being strategic about when you recognize the loss for tax purposes.
One big warning though: the wash sale rule. You can’t sell a stock at a loss and then buy it back within 30 days before or after the sale. The IRS will disallow the loss if you do. So if you really want to stay invested in that company or sector, wait the 30 days. Or buy something similar but not identical.
3. Bunch Your Charitable Donations
Standard deduction or itemized deductions—that’s the fork in the road that determines whether your charitable giving actually reduces your taxes.
For 2024, the standard deduction is $14,600 if you’re single, $29,200 if you’re married filing jointly. Most people take the standard deduction because their itemized deductions don’t add up to more than that. Which means their charitable donations, while meaningful and important, don’t actually create any tax savings. They were going to get that deduction anyway.
Here’s the hack: Bunch two or three years of donations into one year. Instead of giving $5,000 this year, $5,000 next year, and $5,000 the year after, give $15,000 all at once. Now your itemized deductions might actually exceed the standard deduction. You get the tax benefit, and your favorite charities get the money they need.
Donor-advised funds make this even easier. You get the tax deduction the year you contribute to the fund, but you can distribute the money to charities over several years. You contribute cash or appreciated stock, take the deduction, and then grant the money out whenever you want. Plus, if you donate stock that’s gone up in value, you avoid paying capital gains tax on the appreciation while still getting a deduction for the full fair market value. That’s a double win.
4. Review Your Withholding and Estimated Payments
Nobody wants a surprise in April. Not a big refund (that’s an interest-free loan you gave the government), and definitely not a big tax bill.
Pull out your last paystub and your most recent tax return. Are you on track? If you got a huge refund last year, you’re probably having too much withheld. If you owed money, you’re not having enough taken out. The sweet spot is breaking even, give or take a few hundred dollars.
For W-2 employees: Submit a new W-4 to your employer. They made the form simpler a few years ago, but it’s still confusing. The IRS has a withholding estimator tool on their website that walks you through it. Takes about ten minutes.
For self-employed folks or anyone with side income: You need to make estimated tax payments quarterly. The fourth quarter payment for 2024 is due January 15, 2025. Calculate what you owe based on your income for the year. If you’ve been flying by the seat of your pants all year, you might owe a chunk. The penalty for underpayment isn’t huge, but it’s annoying and totally avoidable.
Consider setting up automatic payments from your business checking account each quarter. That way, you’re never scrambling or forgetting. Treat it like any other recurring bill.
5. Take Required Minimum Distributions
If you’re 73 or older (or 72 if you hit that age before 2023), you have to take money out of your traditional IRA and 401(k) accounts. This is non-negotiable. The penalty for missing it is brutal: 25% of what you should have withdrawn.
Your account custodian will tell you the minimum you need to take out. It’s based on your account balance on December 31 of the previous year and your life expectancy according to IRS tables. Most brokerages will even calculate it for you if you ask.
You can withdraw more than the minimum, but there’s no benefit to doing so beyond having the cash to spend. Every dollar you take out counts as taxable income. So if you don’t need the money, take exactly the minimum and let the rest keep growing tax-deferred.
One smart move: If you’re charitably inclined and over 70½, you can do a qualified charitable distribution. This lets you send up to $105,000 directly from your IRA to a qualified charity. It counts toward your RMD, but it doesn’t show up as income on your tax return. You’re basically getting the money out tax-free. You don’t get a charitable deduction for it, but you don’t need one because it never hit your income in the first place.
6. Fund Your Health Savings Account
HSAs are the triple-threat of tax savings. Money goes in tax-free, grows tax-free, and comes out tax-free if you use it for qualified medical expenses. There’s no other account that offers all three of those benefits.
For 2024, you can contribute $4,150 if you have self-only coverage, or $8,300 for family coverage. Add another $1,000 if you’re 55 or older. You have until April 15, 2025, to make contributions for 2024, but again, why wait?
Too many people treat their HSA like a spending account, using the money as soon as medical bills arrive. That works, but you’re missing out on the real power of an HSA. If you can afford to pay your medical bills out of pocket, do that. Let the HSA money sit there and grow. You can reimburse yourself for those medical expenses decades from now if you want. There’s no time limit. Keep your receipts, invest the money in the account, and watch it compound tax-free over the years.
Think of it as a stealth retirement account with better tax treatment than even a Roth IRA because you don’t pay taxes going in either.
7. Consider Year-End Business Expenses
If you’re self-employed or own a small business, December is the time to look at what you can accelerate.
Equipment purchases: Section 179 lets you deduct the full cost of qualifying equipment in the year you buy it, up to $1,220,000 for 2024. Bonus depreciation adds another layer, letting you deduct a percentage of the remaining cost. So if you’ve been eyeing new computers, software, office furniture, or machinery, buying before December 31 means you can deduct it on this year’s taxes instead of spreading it out over several years.
Supplies and inventory: Stock up on things you know you’ll need in the next few months. Office supplies, materials, inventory for resale—all of it is deductible in the year you buy it (as long as you’re using cash-basis accounting, which most small businesses do).
Prepay expenses: You can often prepay things like rent, insurance, or subscriptions and deduct them this year. Just make sure what you’re prepaying doesn’t extend more than 12 months into the future, or you might run into problems with IRS rules about prepaid expenses.
But here’s the thing. Don’t spend money just to get a deduction. That’s like buying a $1,000 item to save $200 in taxes. You’re still out $800. Make purchases that make sense for your business, and then take advantage of the tax benefits that come with them.
8. Look at Your Capital Gains Strategy
Capital gains taxes change based on how long you’ve held an investment and how much income you make. Short-term gains (assets held less than a year) get taxed at your ordinary income rate, which could be as high as 37%. Long-term gains get preferential rates: 0%, 15%, or 20%, depending on your income.
If you’re sitting on investments that have appreciated and you’re thinking about selling, look at when you bought them. If you’re a few weeks away from the one-year mark, waiting until after that anniversary could save you a significant chunk in taxes. The difference between short-term and long-term treatment on a $50,000 gain could be $10,000 or more, depending on your tax bracket.
On the flip side, if you’re in the 0% capital gains bracket (taxable income below $47,025 for single filers, $94,050 for married filing jointly in 2024), you can sell appreciated assets and pay absolutely nothing in federal capital gains tax. This is especially powerful for retirees or anyone having a low-income year. You can even sell and immediately buy back the same investment—the wash sale rule only applies to losses, not gains.
This strategy works particularly well when paired with tax-gain harvesting. Sell the appreciated asset, pay zero tax, and now your cost basis is higher. If you sell again later, you’ll only pay capital gains tax on the appreciation from this reset point forward.
9. Set Up or Contribute to Education Savings
529 plans are the go-to for education savings, and year-end is a great time to make contributions. You don’t get a federal tax deduction for putting money in, but many states offer a state income tax deduction or credit for contributions. The money grows tax-free, and withdrawals for qualified education expenses are tax-free too.
Each state sets its own rules about deductions. Some require you to use your own state’s plan to get the tax break. Others let you deduct contributions to any state’s plan. Check your state’s specific rules before you contribute.
Here’s something people miss: you can use 529 funds for a lot more than just college tuition. K-12 private school tuition (up to $10,000 per year), apprenticeship programs, student loan repayment (up to $10,000 lifetime)—all of these count as qualified expenses. So even if your kid decides college isn’t their path, the money isn’t stuck.
Grandparents, this is a powerful estate planning tool for you. Contributions to a 529 count as completed gifts for estate tax purposes, and you can superfund the account by contributing five years’ worth of contributions at once ($90,000 in 2024) without triggering gift tax consequences. The money is out of your estate, your grandkids get education funding, and you might get a state tax deduction depending on where you live.
10. Document Everything You’ll Need
This is the unsexy part that saves you hours of frustration when you’re actually filing your taxes.
Start a folder—digital or physical, doesn’t matter—and gather everything now. W-2s won’t arrive until January, but you can collect everything else:
- Receipts for charitable donations
- Medical expense records if you think you’ll itemize
- Property tax bills
- Mortgage interest statements
- Business expense receipts if you’re self-employed
- Records of estimated tax payments you made
- Retirement contribution confirmations
- 1099 forms for freelance or contract work
- Childcare provider information (name, address, tax ID)
If you sold a house this year, make sure you have all the documents showing what you paid for it and what you spent on improvements. Those costs add to your basis and reduce your taxable gain. The same goes for selling investments—you need cost basis information to calculate gains and losses accurately.
Take photos of paper receipts before they fade. Thermal paper receipts (the kind you get at most stores) start disappearing within months. Your phone camera is your friend here. Create a folder in your Photos app just for tax receipts. Date and label them so you can actually find them later.
Set up a simple spreadsheet to track mileage if you drive for business or charitable purposes. The IRS standard mileage rate for 2024 is 67 cents per mile for business use, 21 cents per mile for medical or moving purposes (for active-duty military), and 14 cents per mile for charitable driving. Those miles add up fast, but you need records to claim them.
Wrap-Up
You’ve got about eight weeks until December 31. That’s plenty of time to work through this list and set yourself up for a much better tax situation. Pick the three or four items that apply to your circumstances and get them done. Not everything here will be relevant to you, and that’s fine. Focus on what matters for your specific situation and let the rest go.
Your future self—the one filing taxes in April—will be glad you took action now. These strategies aren’t complicated, but they require you to actually do them. So grab your calendar, block out an hour this week, and start checking boxes.