Year-End Tax Checklist for Individuals: Smart Moves Before 12/31

As the year comes to a close, the window for making meaningful tax decisions narrows. Whether you’re an employee, investor, homeowner, or new parent, a few strategic steps before December 31st can lower your tax bill and position you for a smoother filing season.

This guide breaks down the most important actions to consider as you prepare for the upcoming tax year.

🟢 1. Review Your Income and Withholding

Many tax surprises happen because withholding or estimated taxes were off.

🔹 Check your most recent paystub to confirm federal and state withholding.

🔹 If you received a raise, bonus, or started a side business, adjust accordingly.

🔹 Use the IRS withholding estimator to avoid penalties next April.

🔹 High earners should confirm whether they’re on track for AMT or NIIT exposure.

A quick review now can prevent unexpected balances due.

🟢 2. Maximize Retirement Contributions

Retirement contributions are one of the easiest ways to reduce taxable income.

🔹 Contribute to your 401(k), 403(b), or 457(b) before 12/31.

🔹 If eligible, consider Traditional IRA contributions (until April 15, but plan ahead now).

🔹 High-income earners may consider a Backdoor Roth strategy.

🔹 If self-employed, explore Solo 401(k) or SEP IRA options.

These accounts can create immediate tax savings and long-term wealth.

🟢 3. Evaluate Capital Gains and Losses

If you sold investments at a profit this year, plan around the tax impact.

🔹 Review gains, losses, and your overall portfolio.

🔹 Harvest losses to offset taxable gains where possible.

🔹 Be mindful of wash-sale rules when repurchasing stocks.

🔹 Consider whether to delay certain sales until the next tax year.

A simple rebalance can save hundreds or even thousands at tax time.

Business tax planning in progress

🟢 4. Check Eligibility for Credits and Deductions

Year-end is the best time to confirm whether you qualify for tax benefits.

🔹 Child Tax Credit (CTC) and Dependent Care Credits.

🔹 Education credits such as American Opportunity or Lifetime Learning.

🔹 Energy-efficient home improvement credits.

🔹 Medical deductions if expenses exceed 7.5% of AGI.

🔹 Charitable donation opportunities — including donor-advised funds.

Families, students, and homeowners often leave money on the table.

🟢 5. Optimize Health and Flexible Spending Accounts

Healthcare-related accounts come with important deadlines.

🔹 Spend remaining FSA balances before they expire (some plans roll over a portion).

🔹 Contribute to your HSA if you have a high-deductible plan.

🔹 Schedule outstanding medical, dental, or vision appointments.

🔹 Use year-end premiums or expenses to maximize deductions if itemizing.

A little planning helps avoid losing unused funds.

🟢 6. Review Mortgage and Property Tax Planning

Homeowners have unique year-end opportunities.

🔹 Check whether paying January’s mortgage interest early helps you itemize.

🔹 Review timing of property tax payments for deduction benefits.

🔹 Explore energy credits for solar, windows, doors, or HVAC upgrades.

🔹 Ensure proper documentation for refinances or home improvements.

Small adjustments can make a meaningful difference at tax time.

🟢 7. Organize Financial Records

Preparing early reduces stress and improves accuracy.

🔹 Gather W-2s, 1099s, brokerage statements, and crypto reports.

🔹 Track charitable donations, business expenses, and medical receipts.

🔹 Maintain logs for mileage, home office, or rental activities.

🔹 Verify that dependent and childcare records are up to date.

Good organization leads to better tax outcomes.

Professional tax planning consultation

🟢 8. Plan Ahead for Big Life Changes

Certain events significantly affect your tax situation.

🔹 Marriage, divorce, or new dependents.

🔹 Buying or selling a home.

🔹 Significant investment sales.

🔹 Moving to a new state.

🔹 Starting a business or taking on freelance income.

The earlier you prepare, the more options you have.

🟢 The Big Picture

Year-end tax planning isn’t just about reducing your bill - it’s about giving yourself clarity, control, and confidence heading into the new year. With a little preparation, you can take advantage of credits, align your financial goals, and avoid penalties or surprises.

Pacific Taxes can walk you through a personalized year-end review and help you identify the right moves for your situation - whether it's optimizing your retirement contributions, planning around investment gains, or organizing records for a seamless tax season.