With the end of the year fast approaching, it is time to review your year-end items and take advantage of any tax savings that may be available to you.
· IRA Distributions and Roth Conversions
o Any distributions from an IRA, or conversions from Traditional to Roth IRAs, must be completed by the end of the year to be claimed in tax year 2026. If you are wanting to fill a lower tax bracket or maximize the temporary senior deduction by making these moves, now is the time to be crunching the numbers. These items do increase your income, so they can have unforeseen impacts on the taxable amount of your social security benefits as well as qualification for various tax credits. We offer tax planning services to help you optimize your distributions while steering clear of these pitfalls.
· Charitable Contributions
o You must make any charitable contributions no later than December 31 to claim them in the 2026 tax year. If you are taking IRA distributions and are over age 70 1/2, you can work with your financial advisor to make QCDs directly from your IRA to the charity of your choice. QCDs are excluded from income (up to certain limits), so you can take advantage of this exclusion even if you claim the standard deduction. If you are required to take RMDs, QCDs do qualify as your RMD. Starting in 2026, filers claiming the standard deduction can deduct up to $1,000 ($2,000 on a MFJ return) in cash charitable contributions on their federal tax returns. Please keep in mind that political contributions, personal memorials, and personal donations (such as Go Fund Me campaigns) are not deductible. Non-cash contributions are not eligible to be deducted on the federal return without itemizing
· Estimated Tax Payments
o Estimated payments for the 4th quarter are due by January 15, 2027. If you are late with the payments, make sure to pay them as soon as possible to keep any penalties as low as well. The later the payment, the larger the penalty and interest.
· Tax Loss Harvesting
o For those taxpayers holding investments at a loss position, selling those positions as a loss before the end of the year can lower your taxable income for the year. If you work with a financial advisor, they can help you through the process. Just be mindful of wash sale rules should you want to reinvest the same positions that were sold.
The following plan contributions can be made up to the filing deadline of April 15, 2027 and be claimed on your 2026 return. This allows you to start your return and get the preliminary results before making a final decision on any contributions.
· HSA Contributions
o If you are enrolled in a qualifying High Deductible Health Plan (HDHP), your contribution limits for 2026 (combined employer + employee contributions) are $4,400 for self-only coverage, and $8,750 for family coverage. Taxpayers aged 55 and older can add a catch-up contribution of $1,000 to their limit. HSAs are one of the most tax-advantaged accounts available. Contributions are deductible, and distributions are tax-free as long as they are used for qualified medical expenses. Money held in HSAs can be invested and will also grow tax-free, making HSAs a powerful tool for retirement planning.
· IRA Contributions
o The contribution limits for IRAs (traditional and Roth combined) for 2023 are the lesser of $7,500 ($7,500 for taxpayers aged 50 and over) or your taxable compensation for 2026. Income limitations apply to your ability to make tax-deferred traditional IRA contributions, as well as Roth IRA contributions.
Note About Mileage Rates
· The standard mileage rates for business and medical miles were updated mid-year in 2026 to account for higher fuel prices, meaning that there are two different mileage rates for 2026: one for Jan 1 – Jun 30, and one for July 1 – Dec 31. Please remember that mileage deductions require keeping mileage logs, and please make sure you are tracking your miles accurately to make reporting easier when you drop off your 2026 taxes for preparation.
1099 Filing Requirements
· If you made any payments in your course of business to any vendors that are more than $2,000 (updated limit for 2026), you will need to file 1099s no later than January 31, 2026. Ensure that you are getting W-9s from these vendors now if you have not already done so to ensure that you are ready to file the 1099s in January. The best practice is to get the W-9 before issuing any payments. You are not required to file 1099s for any payments made through third party processors (credit card payments, Venmo, PayPal, etc.)
Please contact our offices if you would like to set up an appointment for tax planning before the end of the year. We have office hours year round to serve our clients.
This content is informational only and does not constitute tax, legal or professional advice. While best efforts are made to ensure all information is accurate at the time of posting, tax laws and guidance from regulatory agencies are subject to change. For personal tax advice, please contact our office to schedule a tax planning appointment.
