When autumn arrives, taxes probably aren’t the first thing on your mind. But September and October can be some of the best months to take a closer look at your tax situation.
Waiting until December—or worse, until tax season—can limit the planning options available to you. A fall tax checkup gives you time to review your income, make adjustments, and take advantage of opportunities before the end of the year.
Here are six areas worth reviewing this fall.
1. Review Capital Gains and Losses
Did you sell stocks, mutual funds, real estate, or other investments this year? Now is a good time to review your realized capital gains and losses.
If you have investments that have declined in value, there may be opportunities to offset some taxable gains by realizing losses. On the other hand, selling an appreciated investment could create an unexpected tax bill.
Before making investment decisions solely for tax purposes, consider both your overall financial goals and the potential tax consequences.
2. Check Your Retirement Contributions
Retirement contributions can be an important part of both long-term financial planning and year-end tax planning.
Review how much you’ve contributed so far this year to accounts such as a 401(k), 403(b), IRA, SEP IRA, SIMPLE IRA, or other retirement plan.
If you’re a business owner or self-employed, fall is also an excellent time to discuss retirement-plan options. Some strategies require more preparation than simply making a contribution at the end of the year.
Contribution limits, deadlines, and tax treatment vary depending on the type of account, so don’t assume every retirement contribution follows the same rules.
3. Plan Your Charitable Giving
If charitable giving is part of your year-end plans, don’t automatically wait until the last week of December.
Consider which organizations you’d like to support and how you plan to make those gifts. Depending on your circumstances, cash may not always be the only option. Certain taxpayers may want to discuss strategies involving appreciated assets or, when eligible, distributions from retirement accounts.
Keep good records of your donations and remember that the tax benefit of charitable giving depends on your individual situation and applicable deduction rules.
4. Review Your Estimated Tax Payments
If you’re self-employed, own a business, receive investment income, have significant interest or dividend income, or otherwise receive income without enough tax withheld, estimated payments deserve a fall checkup.
Your income may look very different now than it did when you calculated your payments earlier in the year.
Ask yourself:
- Has my income increased or decreased?
- Did I have a large capital gain?
- Did my business perform better than expected?
- Have my deductions changed?
- Am I withholding enough from wages or retirement income?
Finding a potential shortfall in the fall gives you more time to address it instead of discovering it when your return is prepared.
5. Don’t Forget Your Health Savings Account
If you’re eligible to contribute to a Health Savings Account (HSA), review your contributions for the year.
HSAs can offer significant tax advantages. Eligible contributions may be tax-deductible or made pre-tax through payroll, earnings can grow tax-free, and qualified medical withdrawals can also be tax-free.
However, HSA eligibility and contribution limits depend on your health coverage and individual circumstances. If your insurance changed during the year, make sure you’re still eligible before making additional contributions.
6. Business Owners: Look Ahead at Purchases
Need new equipment, computers, furniture, machinery, software, or other items for your business?
Fall is a good time to review purchases you were already planning and discuss whether completing them before year-end makes financial and tax sense.
But don’t buy something you don’t need simply because you hope to receive a deduction. Spending $10,000 unnecessarily to save a portion of that amount in taxes still means you’ve spent money you didn’t need to spend.
The timing of when property is purchased, placed in service, financed, or paid for can also affect its tax treatment. Talk with your Bruce before making a major year-end purchase.
Your Fall Tax Planning Checklist
Before the leaves are gone, consider reviewing:
- Capital gains and investment activity
- Retirement contributions
- Charitable giving plans
- Estimated tax payments and withholding
- HSA eligibility and contributions
- Planned business purchases
- Major changes in income
- Changes in your family, employment, or business
Tax Planning Works Better When There’s Time to Plan
One of the biggest differences between tax preparation and tax planning is timing.
Tax preparation generally looks backward at transactions that have already happened. Tax planning gives us an opportunity to look ahead and consider what can still be done.
That’s why fall can be such a valuable planning window.
If your income, investments, business, retirement plans, or family situation have changed this year, don’t wait until December 30—or until you’re sitting down to prepare your tax return.
Schedule a fall tax planning conversation with Gleason Tax Advisory and let’s look at your situation while there’s still time to make thoughtful year-end decisions.
Schedule a fall tax planning conversation
let’s look at your situation while there’s still time
to make thoughtful year-end decisions.
