End-Of-Year Tax Strategies You Should Try

Imagine: It’s the end of the year, and you’re looking forward to the next one. After a full calendar’s worth of positives and negatives, you’ve almost reached the reset button and move forward. We know the feeling! There’s nothing quite like starting out fresh in the new year. However, before you get too excited about the year ahead, there are a few financial moves you should make before the clock ticks over to January 1st. So let’s talk end-of-year tax strategies.

We tend to advocate for doing a little bit of work on your taxes year-round, rather than waiting until tax season to deal with the build up. We’ll go into greater detail later as to why we think this way, but for now, just trust us—you have plenty of natural opportunities to manage your taxes throughout the year. And typically, the time investment will be quite low. One of the best times to make some tax moves? In November and December, aka before the end of the year.

A number of strategies can help you lower your tax bill, increase your refund, and set the stage for an even stronger financial year ahead. However, many people wait until the last minute—or after—and miss out on the benefits of these end-of-year tax strategies altogether.

As a full-service tax representation firm, we’ve prepared taxes for literally thousands and thousands of taxpayers just like you. We’ve worked with businesses of all sizes and with folks dealing with tax debt totals large and small. And whether dealing with a tax debt horror story or an easy-breezy tax return, we see one bad habit over and over again. Outside of tax season, most people tend not to think about their taxes—and that means missing out on opportunities to save money down the line.

So, we’re here to correct that. If you try even one of the tax strategies in this article, you have the potential to transform your taxes next year. So, we’ll walk you through all the end-of-year tax strategies you should keep in mind and how they can benefit you. We’ll explain the potential consequences of skipping out on these end-of-year tax strategies. And we’ll walk you through a new financial mindset to help you maximize your tax savings year round.

End-Of-Year Tax Strategies You Should Try

How many end-of-year tax strategies exit? Well, dozens. We probably won’t cover them all here, but we’ll cover a lot of them to give you some good inspiration so you can pick and choose. Below, we’ve broken down these strategies into a few parts. Read all of them, or skip to the part that you feel best speaks to you.

End-Of-Year Tax Strategies to Lower Your Tax Obligation

Looking to lower your tax obligation? We’ve got you covered. Some end-of-year-tax strategies help reduce the amount of taxes you actually owe in the first place. Depending on the strategy, these can result in a lower tax bill—or even a refund.


One of the most popularly discussed tax strategies leading up to the end of the year: donations. You’ve probably received more than your fair share of emails or ads reminding you to “make your tax-deductible donation before January 1st!” And that’s for good reason.

It pays to be charitable. And your charitable spirit can express itself in a large number of ways that the IRS deems worthy of a tax deduction. Here are a few things you’ll need to keep in mind:

  • You must make your donation to a tax-deductible organization. Even if you donate to a local organization, if it doesn’t have the right designation by the IRS, you won’t be able to write it off successfully.
  • Most charities fall into a few categories, and focus on issues around education, science, public safety, and some others. Charities will typically fall into a status as a public charity, a private foundation, or a private operating foundation.
  • Organizations with tax designations of 501 or 509 will typically count for your tax-deductible donations.
  • Not all donations involve dollars and cents. Donations can include furniture, cars, clothing, and supplies all count.
  • The IRS wants receipts. Keep them.

Batched Donations

Strategizing around your donations can help maximize your tax savings. However, under the new tax laws, the standard deduction has become harder to overcome with typical itemized deductions.

Through batched donations, the process by which you group your intended donations then donate on alternating years. This can maximize your tax-deductible donations for single tax years and give you a better shot at eclipsing the standard deduction—thus saving more.

Selling Appreciated Stock

While non-cash assets can add an additional layer of complexity to the donation process, they can help you reduce your taxes if done correctly.

Let’s say you purchased 500 shares of a stock 10 years ago at $1 a share. Your cost basis in that stock equals $500. If that stock has risen in value to $10 a share, your stocks are now worth $5,000. Were you to sell those stocks, you would pay taxes on $4,500.

Instead, if you donated your stock to a donor-advised fund or a public charity, you might be able to eliminate the taxes you would pay on that $4,500 increase. Also, you could potentially claim an income tax deduction for the fair market value of the $5,000 in stocks you donated.

End-Of-Year Tax Strategies: Retirement & Health

For most taxpayers, planning for your retirement and healthcare represents a regular part of life. However, you can maximize the tax advantages of preparing yourself for your financial future—or health present—with a few tax strategies.

Retirement Contributions

Retirement plans offer a path to building your retirement and financial security for the long haul. In most cases, your retirement contributions can also offer tax benefits. Here, we’ll walk you through a couple of the options you have to defer taxes while saving for your golden years.


A number of 401(k) plans allow you to defer your taxes until later on. Let’s outline a few variations:

  • Safe Harbor 401(k): As an employee, you own 100% of the money your employer contributes.
  • SIMPLE 401(k): You may participate in this plan if you work for an employer with fewer than 100 employees.
  • Traditional 401(k): This kind of plan is most popular with larger companies.
  • Solo Ks/Uni-Ks: Traditional, tax-deferred 401(k) plans that you may use as a self-employed individual.

Here’s how the tax deferral element works: With a 401(k), you set aside a portion of your pay before any federal or state taxes factor in. Because you set this money aside before any taxes are withheld, the 401(k) plan will lower your taxable income—resulting in lower income tax.

So, if you earn $100,000 a year and you fall into the 25% tax bracket, you would normally take home $75,000 after paying $25,000 in taxes. However, if you put 5% into your 401(k), your taxable income falls to $95,000. Now, you’ll take home $71,250. While this number is $3,750 lower than your take-home pay otherwise, you’ll have invested $10,000 total into your retirement that year. Quite the advantage!


Generally, the IRS rewards anyone planning for retirement—regardless of the path they choose in getting there. IRAs, otherwise known as Individual Retirement Accounts, offer tax benefits for those who make contributions to their retirement. Up unto a limit (outlined by the IRS here), you can contribute money to your IRA, then deduct that total on your taxes.

The SEP IRA, otherwise known as a Simplified Employee Pension Individual Retirement Account, gives business owners a relatively straightforward method of contributing to employee retirement accounts. But they can help reduce your employer’s tax obligation in the process, which makes them attractive to certain business owners.

Most IRAs do not allow for employer contributions, with SEP-IRAs as the notable exception. With a SEP-IRA, the standard tax benefits apply to employer contributions while maintaining the same rules typically applied to IRAs. Generally, a business can deduct 100% of employer contributions.

HSAs, FSAs, and HRAs

Depending on your choice and options for personal health accounts, you can take advantage of certain tax benefits.

HSAs, or Health Savings Accounts, you’ll typically set up yourself—even at your local bank. You own this account, but you (or even your employer) can contribute year-round to your savings. However, you’ll need to have a HDHP (High Deductible Health Plan) in order to have the HSA. You can earn interest on your HSA and withdraw this money as taxable income upon retirement, quite similar to how the IRA works. However, prior to retirement, any qualified contribution you or your employer makes to your HSA will grant you an equally sized deduction on your taxable income.

An HRA, or Health Reimbursement Arrangement, carries some similar benefits to other health spending accounts, but only your employer owns and funds it. Typically, they will limit how much of your account you can rollover from year to year, including retirement (with some exceptions). You cannot make withdrawals for purposes other than qualified healthcare expenses. And whatever amounts your employer may contribute to this plan, you won’t owe taxes on it. But when you spend money on your qualified healthcare expenses, you don’t pay taxes on these withdrawals. So, effectively, you pay your health expenses with pre-tax dollars.

A Health FSA, or Flexible Spending Account, functions similarly to a HRA. Your employer owns it, and it can be funded by both you and your employer. You can’t earn interest on a flexible spending account, and FSAs don’t allow for taxable withdrawals, either. FSAs generally will expire whenever you leave your current employer, or at the end of the year. Some exceptions may apply. However, FSAs allow you to spend your income on qualified healthcare expenses without paying taxes on it.

End-Of-Year Tax Strategies: Traditional Deductions

Make Deductible Purchases

You probably already consider yourself well versed in the art of finding deductions. Most people do! But even if you’re new to the tax deduction game, you can typically rely on a few deductions that can really help reduce your tax obligation.

Of course, since the Tax Cuts and Jobs Act of 2017, you’ll need to overcome the standard deduction if you want to actually make use of your deductible expenses (for individual filers). But should you decide to itemize your expenses as a business owner or self-employed worker, you can cap off your tax year with deductible purchases that you’ll ultimately be able to write off.

Especially if you own a business, you might look to make purchases for the next year or renew your subscriptions. These types of expenses will not only help you for the year ahead, but will end up right back in your pocket within just a few months.

Enroll in Training

In practice, this end-of-year tax strategy will take a relatively similar form to our last point on deductible purchases. Essentially, job training and education count as deductible expenses. And you might find the end of the year makes the perfect opportunity to sign up for a new class, learn a new skill, and lower your tax bill in the process.

Of course, the standard deduction makes capitalizing on this deduction a heck of a lot more challenging for the average tax filer. But especially if you earn income as a self-employed person, now you can have a little New Year, New You on Uncle Sam’s dime.

Pay Your Bills

If you have student loan debt or a mortgage, those two bills may cause you more than your fair share of headaches throughout the year. Fortunately, tax time offers you a chance to get things squared away. Did you know that you can deduct your mortgage interest, as well as the interest you pay on your student loans?

You totally can! And what a relief that should be. While in most cases, you’ve probably been making payments throughout the year, you might find opportunities to make an additional payment before the ball drops on New Year’s Eve.

And with that comes just a wee bit of deductible interest you’ve paid. And unlike the $300 it might cost to take a small training class or the $2000 you spend on a computer for your freelance work, mortgage interest and student loan interest can really add up. If you make either of these payments, you may have a decent shot at beating the standard deduction and itemizing your deductions.

Here’s more from the IRS directly on how to take the mortgage interest deduction.

End-Of-Year Tax Strategies: Lowering of Income

Delaying Billing 

Much like for individual tax return fillers, business owners need to be mindful about when, exactly, they receive their income. And for that very reason, strategizing around when you bill your clients may offer you some leeway on your tax bill.

We probably don’t have to explain the concept in depth, but we’ll walk you through an example. Should you find yourself in a situation where you can bill a client for services rendered on Dec. 15, you might determine it more advantageous to wait until Dec. 29 or Jan. 3 to bill, instead. Of course, this all comes down to your own personal business goals and plans. But if you’re looking to lower your tax bill, delaying billing equates to lowered income—and ultimately, a lowered tax bill. Mission accomplished.

Lowering Retirement Distributions

Once you’ve reached retirement age, your retirement distributions will count as your income. And the IRS will tax that income. However, if you have the means or the opportunity to lower your distributions, you can achieve a lowered income which may reduce your tax obligation by lowering your tax bracket.

Of course, this only works to a certain extent. You can’t just take zero retirement distributions, because the IRS will then penalize you for that action instead. But if you find yourself in a financial position to do so, and you’d like to lower your tax bill, then you have a path forward. Take the minimum distributions, at least, or a reduced distribution, and you won’t owe as much come tax season.

End-Of-Year Tax Strategies: Maintenance

While we tend to think of most end-of-year tax strategies only for 1-2 months every year, you should keep in mind certain, simple tax strategies that can help you both then and year-round. We’ve listed a few so you can get started before January 1st—or any time after that.

Sorting Your Tax Receipts

Looking to deduct the cost of a piece of software for your business? Keep the receipt. Have a qualified expense on your HSA? Keep the receipt. We could go on and on, but it all boils down to the same sentence: Keep the receipt.

So much of your regular tax documentation comes down to keeping and organizing your receipts. And if you haven’t kept things together thus far in the year, the end of the year marks the perfect time to kick that process off. As much as you may want to procrastinate, trust us. A little bit of inconvenience now with organizing and labeling your receipts you think you’ll need for your taxes will pay dividends during tax season when you don’t have to dig everything up.

Then, one of your end-of-year tax strategies just might become a year-round habit. 

Making List of Accounts & Investments & Income Streams

Among your end-of-year tax strategies, you should include one task that takes less than 10 minutes. Seriously. All you need to do is look back and make a list of all the financial accounts you have and another list of your income streams.

Why? It’s really easy to forget things during tax seasons when tensions are running high. You might just forget you had your first renter in your newly set up Airbnb. Or that you made your first Etsy sale in December. Similarly, you may not remember your Etrade account and leave it off your tax return entirely.

But by making a simple list now, you can avoid omitting something during crunch time. It can help prime you to update your address or any personal info, and it will help you from potentially owing a surprise tax bill come April.

Bonus Tip #1: Estimate Tax Bill

Take it from us. One of the worst feelings in the world is discovering you have a tax bill you weren’t expecting. We’ve had more than our fair share of clients deal with this realization, and it’s never fun. Unexpected tax bills lead to anxiety, financial strain, and tax debt.

One way to avoid this potential outcome is to make an estimate of your tax bill before you hit the New Year. It doesn’t have to be too extreme; just listing out your income streams and basic expenses will do the trick. Altogether, this will help give you a ballpark of what your taxes should look like. Then, based on your actual income expressed on your tax documents, you can estimate whether you may owe the IRS. Or if you’ve earned a refund!

Owing taxes after filing your return is common. What makes it such trouble? Not having the opportunity to save and adjust for it. Instead, don’t get caught flatfooted and get prepared in case you need to pay.

Bonus Tip #2: Seek Out New Tax Credits

The end of the year makes for the perfect time to look for new tax credits. While a professional tax preparer can maximize your savings, you can always do a bit of research yourself beforehand. Just Google something like “best tax credits 2020 Illinois” (or your year and state of choice), and see what comes up.

Perhaps you’ll find a piece of news that guides you to some serious savings. Or maybe you’ll find out you’re already maximizing your savings. Either way, you’re putting yourself in a position of power when tax time rolls around.

Happy New Year! Now Let’s Save.

As the holiday season chugs along toward Jan. 1, you’ve probably got a lot of thoughts rolling around about how to make the New Year great. And you might not want to add too many thoughts about taxes to the mix. But we promise: A bit of forethought about your taxes can pay you back handsomely come tax season.

Hopefully, you’ve found a couple end-of-year tax strategies that fit your financial situation. If so, run with them and don’t stop there! Keep searching and connect with an expert tax prep company who can help you squeeze every last cent from your tax return. It may be the end of the year. But with the right planning, it’s only the very beginning of your tax savings.


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