The window that closes December 31 — and doesn't reopen.
Most tax strategies require action before December 31. January is too late for the moves that matter most.
The Situation
The tax year is a closed system. Once December 31 passes, your taxable income, deductions, and gains are fixed. The moves that reduce your tax bill — additional retirement contributions, charitable giving, loss harvesting, Roth conversions, withholding adjustments — all have hard deadlines. The difference between acting in November and acting in February can be thousands of dollars.
January 1 is too late for most tax strategies. The best tax planning happens while the year is still open.
— Worthune Decision Framework
Year-End Checklist · Steps 1 & 2
401(k) employee contributions must be made through payroll by December 31. IRA contributions can be made until April 15 of the following year — but acting early allows more investment time. HSA contributions (if eligible) also have an April 15 deadline for the prior year.
401k deadline is December 31If your income this year places you in a favorable bracket for Roth conversions — particularly if you expect higher income next year — execute the conversion before December 31. Each year's conversion opportunity is independent and non-recoverable.
Conversions are year-specificYear-End Checklist · Steps 3 & 4
Review taxable accounts for unrealized losses. Sell to realize losses before December 31 — they can offset gains and up to $3,000 of ordinary income in the current tax year. Unused losses carry forward indefinitely but this year's gains offset opportunity closes with the year.
Losses must be realized before Dec 31Cash donations and transfers of appreciated securities must be completed by December 31 to count in the current tax year. Qualified Charitable Distributions (QCDs) from IRAs — for those over 70½ — must also be executed before year-end.
Charitable giving deadline is December 31Year-End Checklist · Steps 5 & 6
If you've had unusual income this year (bonus, investment sale, self-employment), verify your total withholding and estimated payments cover at least 90% of this year's tax or 100% of last year's tax (110% if prior year AGI exceeded $150,000). Underpayment penalties apply regardless of when you pay the balance.
Verify coverage before December 31If your itemized deductions typically fall just below the standard deduction threshold, consider bunching — concentrating two years of deductible expenses (charitable giving, property taxes within limits) into one year to exceed the standard deduction, alternating with taking the standard deduction the next year.
Bunching creates alternating tax benefitAfter the Work
After reviewing the checklist:
Your tax year is optimized. Set a November calendar reminder for next year's review.
Prioritize by deadline: 401(k) payroll contributions first, then harvesting, then charitable giving.
Review this checklist in October or November — not December. The last-minute rush closes some options.
Every December 31 that passes without a tax review is a permanent missed opportunity.
Next Step
Use Worthune's year-end tax planning guide to work through every action item with personalized deadlines and estimated tax impact for each.
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