Smart Tax Moves to Make Before the Year Ends — Especially After a Life Change

As the end of the year approaches, it’s easy to get caught up in the rush of holidays and closing chapters. But this season also offers a powerful opportunity to make strategic financial decisions — especially if you’ve experienced a life change.

Whether you’ve gone through a divorce, stepped into a caregiving role, or adjusted your retirement timeline, the tax decisions you make now can shape your financial confidence in the new year.

Maximize Retirement Contributions

One of the most impactful ways to reduce your taxable income — and build toward long-term goals — is by maximizing your retirement contributions.

If you’re still working, review the limits for 401(k), 403(b), and IRA contributions. If you’re age 50 or older, take advantage of catch-up contributions, which allow you to save even more.

For some, this may also be a good time to evaluate a Roth conversion — moving funds from a traditional IRA to a Roth IRA. While this does create a taxable event now, it can provide tax-free growth and withdrawals later. It’s a move that requires careful planning, especially after a major transition.

Review Tax-Loss Harvesting Opportunities

If you’ve sold investments at a loss this year, you may be able to use those losses to offset gains — or even reduce your taxable income. This strategy is known as tax-loss harvesting.

In simple terms: if you sold one investment at a gain and another at a loss, those amounts can offset each other for tax purposes. And if your losses exceed your gains, you may be able to deduct up to $3,000 against ordinary income (or carry the loss forward to future years).

This is particularly helpful in years when your income has shifted — such as after a divorce or retirement.

Use Flexible Spending Accounts and HSA Contributions

If you have a Flexible Spending Account (FSA), remember that many plans require you to use the funds before year-end or risk losing them. Check your plan’s rules and spend remaining dollars on eligible healthcare expenses while you still can.

For those with a Health Savings Account (HSA), consider maximizing your contributions. HSAs offer a triple-tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified healthcare expenses are also tax-free.

HSAs can also serve as a powerful long-term planning tool — not just for this year, but for retirement healthcare expenses down the line.

Consider Charitable Giving

Charitable giving isn’t just good for the community — it can also benefit your tax plan.

If you itemize deductions, donor-advised funds allow you to bundle multiple years of charitable giving into one contribution. This can increase the tax benefit in a high-income year, while allowing you to give over time.

If you’re over age 70½ and have a traditional IRA, qualified charitable distributions (QCDs) allow you to donate directly from your IRA to a qualified charity. These gifts can count toward your required minimum distribution and reduce your taxable income.

If your financial goals are deeply connected to your values, charitable giving can play a meaningful role in both.

Life Change? Update Your Withholding or Filing Status

Major life events can directly impact your tax situation.

A divorce, a death in the family, or becoming a caregiver may change your filing status, affect deductions, or shift your tax withholding needs.

If you haven’t already, review your paycheck withholding or estimated tax payments to avoid surprises come April. Making adjustments now ensures your taxes reflect your current reality — not last year’s.

Conclusion: Be Intentional with the Time You Still Have

Year-end doesn’t have to feel rushed. With the right guidance, this season can be a chance to slow down, reassess, and make purposeful decisions — especially after a year of change.

This article was originally published here and is republished on Wealthtender with permission.

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