Max Out Tax Deferred Contributions
The clock’s ticking. If you haven’t maxed out your 401(k), IRA, or HSA, now’s the time. Contributions made before December 31 could shrink your taxable income for the year. Fewer taxes, more money saved. Simple.
For 2026, contribution limits are climbing. The IRS has adjusted for inflation, so you can stash away more: up to $23,000 in a 401(k) if you’re under 50, and $30,500 if you’re 50 or over, thanks to catch up contributions. IRAs let you tuck in $7,000, or $8,000 with the catch up boost. HSAs? They’re letting individuals tack on $4,150, or $8,300 for families with an extra $1,000 if you’re 55+.
Every dollar shoved into these accounts lowers your taxable income. Less income on paper equals less tax owed. It’s not just talk it’s a direct line to keeping more of what you earn.
Waiting until April to think taxes? You’ll miss this window. December 31 is the real deadline. Start making space in your budget and get those contributions locked in.
Review Withholding and Estimated Taxes
Waiting until tax season to figure things out? That’s how people end up with a penalty letter in the mail. The IRS expects you to pay as you go. If you made more in 2026 whether from a raise, bonus, or side gig you might owe more than you think.
First move: take a hard look at your income so far. If it’s up compared to last year, check if your withholding covers it. Use the IRS Tax Withholding Estimator to get a rough idea. If you’re freelancing or side hustling, calculate whether your Q4 estimated payment is enough.
From there, fix what needs fixing. Swap out your W 4 with more accurate info or send in a quarterly payment before the January deadline. Bottom line: small tweaks now can save you from bigger headaches (and fines) later.
No one likes giving the IRS more money than necessary but underpaying isn’t a better option.
Harvest Tax Losses
If your portfolio has a few duds, now’s the time to put them to work. Selling off underperforming investments before year end can help offset capital gains from assets you sold at a profit. This move known as tax loss harvesting lowers your overall tax bill by reducing your taxable gains, sometimes significantly.
Here’s how it works: Let’s say you made $10,000 on profitable stock sales this year. But you’re still holding $3,000 in losses on a few deadbeat investments. Sell those losers before December 31, and you can subtract that $3,000 from your gains meaning you’ll only be taxed on $7,000.
But don’t get tripped up by the wash sale rule. IRS rules say you can’t sell a stock at a loss and turn around to buy it or something nearly identical within 30 days. Do that, and your loss is disqualified. So if you’re harvesting losses, pick replacements that are truly different enough to stay in the IRS’s good graces.
Executed correctly, tax loss harvesting isn’t just cleanup it’s strategy. Act before the deadline, and let those losses work for you.
Take Advantage of Credits and Deductions
There’s real money on the table and too many people forget to grab it. The Child Tax Credit is still one of the biggest opportunities for families. If you qualify, it’s a direct credit against what you owe, not just a deduction. Same goes for education credits like the American Opportunity or Lifetime Learning Credits. Paying tuition or fees for yourself or a dependent? Those could cut your tax bill, fast.
Then there’s the lesser known stuff that adds up: installing energy efficient windows, heat pumps, or solar panels may qualify you for clean energy tax breaks. It’s a good time to upgrade smart.
Now, about charitable giving: don’t get sentimental, get strategic. Bunch your donations into one tax year to break the standard deduction threshold. Say you usually give $2,000 annually consider stacking two years’ worth into one. That way, you itemize once and get the tax break.
Bottom line: credits and deductions are like free money you earn by planning ahead. Don’t wing it. Make a list, check the criteria, and claim what’s legally yours.
Evaluate Your Tax Filing Status Now
Choosing the correct tax filing status is more than a box you check in April it can significantly impact how much you owe or receive in a refund. Review your living and financial situation now to ensure you’re filing under the most beneficial status for 2026.
Know Your Options
Each filing status comes with its own thresholds, deductions, and benefits:
Single: If you’re unmarried and don’t qualify for another status.
Married Filing Jointly: Typically offers the best tax break for married couples.
Married Filing Separately: Useful in certain financial or legal situations.
Head of Household: For single taxpayers who support a dependent.
Qualifying Widow(er): If you’ve lost a spouse in the last two years and support a dependent.
Life Changes That Could Shift Your Status
Your filing status can change depending on any significant life events:
Marriage or Divorce: These directly affect whether you file jointly or individually.
New Dependents: Children, elderly parents, or other qualifying individuals could make you eligible for head of household.
Income Changes: Shifts in income could make one status more beneficial than another.
Why It Matters
Planning now means fewer surprises during tax season:
Helps optimize deductions and avoid delays when filing
Impacts eligibility for certain credits and exemptions
Reduces the chances of errors that lead to IRS notices
Take a few minutes to assess your living situation by year end it’s a simple step that smooths the entire filing process.
Organize Receipts and Digital Records
Staying organized is one of the simplest and most overlooked ways to minimize stress when tax season hits. Getting your paperwork in order before the end of the year can save hours of searching and potentially avoid missed deductions.
Gather Key Documents Early
Whether you prefer paper or digital, now is the time to create a system that works for you:
Medical expenses: Save receipts, bills, and prescriptions
Charitable donations: Collect donation confirmations or letters from organizations
Business costs: Track everything from office supplies to software subscriptions
Use labeled folders or cloud based tools like Google Drive, Dropbox, or a simple spreadsheet to stay sorted.
Digitally Track Your Finances
Make use of tax friendly apps that simplify tracking and categorization:
Mileage tracking: Try apps like MileIQ or Everlance if you drive for work or freelancing
Invoice management: Tools like QuickBooks Self Employed or Wave can keep income logs organized
Expense logging: Consider apps that link to your bank and categorize expenses automatically
Avoid the April Crunch
Being proactive now means:
Less stress when it’s time to file
Fewer bookkeeping errors
Maximized deductions because nothing gets overlooked
Small steps in December can lead to big time savings and peace of mind by spring.
Don’t Overlook Refund Opportunities
Every year, billions in tax deductions go unclaimed not because people don’t qualify, but because they didn’t know they could. Educator expenses, out of pocket classroom supplies, self employment costs, and even certain home office expenses can all chip away at your taxable income. The devil’s in the details, but so is your refund.
Self employed? Don’t forget mileage, software subscriptions, or that part of your phone plan used for business. Teachers? Keep those receipts. These overlooked write offs won’t come looking for you you have to bring them to the table.
Get ahead of next year now. If you wait until 2027 to realize something was missing, it’s too late to fix it. Go line by line through last year’s return and ask what changed. Did you freelance more? Incur unexpected medical bills? Start fresh side gigs? Prep now, get credits later.
For more refund maximizing ideas, check out 7 Smart Tax Tips to Maximize Your Refund This Year.
Book a Year End Tax Review
This isn’t a long conversation it’s 30 minutes, maybe less. But sitting down with your tax advisor before year’s end could be the difference between a manageable tax bill and a nasty surprise in April. A short meeting gives you time to align financial goals, map out strategies under new 2026 tax rules, and tighten anything that slipped through the cracks.
Especially this year, assumptions are dangerous. What worked in 2025 may not hold up moving forward. Laws shift, credits vanish, phase outs creep in. Your tax pro stays on top of this. Use their brain and experience to adjust your income timing, retirement contributions, or capital gains moves while there’s still time to act.
December is your window. Miss it, and you’re playing defense next year. Set the meeting. Show up with questions. And walk away with fewer headaches down the road.
