Year-End Checklist: Top 20 Financial Moves Before December 31

If you’ve realized capital gains in your taxable accounts this year, now is the time to offset those gains by selling losing positions. This strategy, known as tax loss harvesting, reduces the taxes owed on your gains. This is one of the most effective ways to lower your tax liability while staying invested but beware of the wash-sale rule.

For those with a Flexible Spending Account (FSA), now is the time to check your balance. Most FSA plans operate on a “use it or lose it” basis, meaning unspent funds don’t roll over. Some employers do grant an extra 2.5 months to spend the balance before you forfeit it. Consider using those dollars for eligible expenses like medical supplies or vision care. Many online retailers even categorize FSA-eligible items for easy shopping.

If 2024 has been a lower-income year for you, consider a Roth conversion. By moving funds from a traditional IRA or 401(k) to a Roth account, you pay taxes on the converted amount now, but the money grows tax-free forever. This is especially advantageous if you expect to be in a higher tax bracket in the future. However, make sure the conversion doesn’t push you into a higher tax bracket this year. Read more here…

Generosity can go hand in hand with tax savings. Donating appreciated stocks instead of cash allows you to avoid capital gains taxes while still receiving a deduction for the full value of the donation. Using a donor-advised fund (DAF) lets you bundle several years’ worth of giving into one tax-deductible gift this year, while giving you flexibility on when to disburse funds to charities. It’s a powerful strategy for those looking to make an impact.

A. If you’re a business owner and expect to have a profitable year, consider prepaying for software, services, or other essentials for 2025. This reduces your taxable income for 2024.

B. Similarly, if you’ve considered putting your kids on payroll for legitimate work in your business, completing this by December 31 lets you deduct their wages and potentially shift some income to their lower tax bracket.

If you own an LLC or a small business (and you don’t qualify for the large operating company exemption.) , you are now required to file a Beneficial Ownership Information (BOI) report by December 31. Failure to comply could lead to hefty fines. The filing process takes just minutes, and staying compliant ensures you avoid unnecessary headaches down the road.

If your income is too high to contribute directly to a Roth IRA, you can still take advantage of its tax benefits through a backdoor Roth IRA. For those with access to a Mega Backdoor Roth via their employer’s plan, this is an even bigger opportunity to contribute after-tax dollars that grow tax-free. While the deadline is technically tied to tax filing, completing the contributions and conversions by December 31 simplifies reporting and ensures compliance with pro-rata rules.

S-Corp owners should calculate their optimal W-2 salary before year-end to maximize the Qualified Business Income (QBI) deduction while meeting IRS requirements. Run payroll by December 31 to lock in significant tax savings.

For self-employed individuals, a Solo 401(k) is one of the best retirement savings vehicles available. You can contribute far more than a SEP IRA allows, including both employee deferrals and employer contributions. If your spouse is part of your business, they can also contribute, potentially doubling your tax-deferred savings. Make sure to establish the plan by December 31 to take advantage of it for 2024.

The annual gift tax exclusion lets you gift up to $18,000 per recipient this year ($36,000 if married and gifting jointly) without affecting your lifetime exemption. This resets every calendar year, so now is the time to make those gifts. You can also use this exclusion to fund 529 college savings plans, giving your loved ones a head start on education savings.

Ensure you’ve contributed the maximum allowed to your 401(k) or IRA accounts. For 2024, the 401(k) limit is $23,000 , and the IRA limit is $7,000. Contributions to traditional accounts may reduce your taxable income.

If you have a high-deductible health plan (HDHP), maximize your HSA contributions. For 2024, the limits are $4,150 for individuals and $8,300 for families, with an additional $1,000 catch-up contribution if you’re 55 or older. Contributions grow tax-free, and withdrawals for medical expenses are also tax-free.

Contribute to a 529 education savings plan to take advantage of potential state tax deductions. These accounts grow tax-free when used for qualified education expenses, making them a powerful tool for funding your children’s or grandchildren’s education.

Review and update the beneficiaries on your retirement accounts, insurance policies, and other financial documents. Life changes, such as marriage, divorce, or the birth of a child, may warrant adjustments.

Year-end is a good time to evaluate your insurance needs. Check your life, health, disability, and property insurance policies to ensure you have adequate coverage for your current circumstances.

Begin gathering tax-related documents, such as W-2s, 1099s, and receipts for deductions. Staying organized now will make filing your taxes much smoother in the spring and help you avoid last-minute surprises. Here is a link to my guide on organizing your tax documents.

If you’re over 73 or inherited an IRA, make sure to take your Required Minimum Distributions (RMDs) by December 31 to avoid a 50% penalty on the amount not withdrawn. Consider coordinating with your advisor to minimize the tax impact. Fidelity has a great article on taking your first RMD.

Review your emergency fund to ensure you have three to six months’ worth of expenses saved. If you’re underfunded, plan to allocate some year-end income or bonuses toward this critical financial safety net.

If you have credit card points or rewards programs, check for expiring benefits. Use points toward travel, gifts, or other purchases to maximize their value before the year ends. Check this year-end credit card checklist

Use the end of the year to set goals and create a financial plan for the year ahead. Whether it’s saving for a big purchase, planning a vacation, or building retirement savings, having a clear plan can help you stay on track.

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