As the year comes to a close, now is the time to get ahead of your tax planning. A little effort before December 31st can go a long way in maximizing your savings and ensuring a smooth filing process when tax season arrives. Trutaxx Solutions is here to guide you through a checklist to help you finish the year strong and prepare for what’s to come.
Steps to Take Before December 31st
- Review Your Income and Expenses
Before the year ends, take a close look at your income and expenses. Have you received all income reports, such as W-2s, 1099s, or other earnings? This is also a good time to evaluate your deductions. Assess whether you have additional expenses that could reduce your taxable income, like business-related purchases or charitable contributions. - Maximize Contributions to Retirement Accounts
Consider making contributions to your retirement accounts, such as a 401(k) or IRA. These contributions can lower your taxable income and may provide significant long-term savings. If you haven’t contributed to your retirement account yet, now is the time to do so before the year-end deadline. - Consider Capital Gains and Losses
If you have investments, review your portfolio for any potential capital gains or losses. Selling investments at a loss can offset some of the gains you made, reducing your taxable income. This strategy, known as tax-loss harvesting, can help you keep your tax bill lower.
Tax-Saving Opportunities to Use Before Year-End
- Take Advantage of Tax Credits and Deductions
There are several tax credits and deductions you may be eligible for that could save you money. Common ones include the Child Tax Credit, Earned Income Tax Credit (EITC), and education-related credits like the Lifetime Learning Credit. Additionally, if you’re a business owner, look into deductions such as those for home office expenses, mileage, and other eligible business-related costs. - Make Charitable Donations
Charitable donations are a great way to support your community and save on taxes. Donating to qualified charitable organizations before December 31st can potentially reduce your taxable income. Be sure to get a receipt for all donations to substantiate your deductions. - Review Your Health Savings Accounts (HSAs)
If you have a Health Savings Account (HSA), make sure to max out your contributions by the end of the year. Contributions to an HSA are tax-deductible, and funds can be used for qualifying medical expenses. By contributing more to your HSA, you reduce your taxable income while preparing for future medical needs.
Organizing Records for a Smooth Filing Process
- Gather Necessary Documents
Organizing your financial records early will make filing your taxes quicker and easier. Collect all necessary documents, including W-2s, 1099s, receipts for deductible expenses, and any documentation related to investments or business income. Having everything in one place will minimize the stress when tax season arrives. - Track Your Deductible Expenses
If you’ve incurred deductible expenses throughout the year—whether for business, medical, or educational purposes—now is the time to track them. Keep a detailed list of any receipts and expenditures to ensure you can take full advantage of any deductions. - Review Last Year’s Return
Reviewing your tax return from the previous year can help you identify any deductions or credits you might have missed. It can also provide insight into what has changed in your financial situation so that you can plan accordingly.
Finish the Year Strong with Trutaxx Solutions
Taking these steps before the year ends will put you in a great position for tax season. Proper planning now can save you money and reduce the stress of last-minute tax filing.
Get your personalized year-end tax planning session—book today! Our expert team at Trutaxx Solutions is here to help you navigate tax-saving opportunities, organize your records, and ensure you’re fully prepared for the year ahead. Don’t wait—get in touch with us now to schedule your consultation!