December is the last month you can change your tax outcome for the year. Once January arrives, most planning moves are history — the return you file in spring will simply report what happened. A focused year-end review, done before the holidays swallow your calendar, routinely saves taxpayers far more than the hour or two it takes.
This checklist covers 15 action items across income timing, deductions, retirement, business, and state-specific moves. It is built on evergreen strategies that work in any tax year — not on predictions about new legislation. For current thresholds, limits, and deadlines, always confirm the figures at irs.gov before you act.
Income Timing
1. Review Your Full-Year Income Picture
Before making any moves, estimate your total income for the year: wages, business income, investment gains and losses, and any one-time events like a bonus, stock sale, or property sale. Every other decision on this list depends on knowing which tax bracket you are likely to land in. A rough projection now beats a precise surprise in April.
2. Defer or Accelerate Income Deliberately
If you are near the top of a bracket, consider deferring income into January — delaying a client invoice, postponing a bonus if your employer allows it, or holding off on selling appreciated assets. If this year’s income is unusually low, the reverse may pay: accelerating income into the current year can fill up lower brackets at a cheaper rate. Employees have fewer levers than business owners, but timing a bonus or exercising options can still matter.
3. Harvest Investment Losses
Review your taxable investment accounts for positions trading at a loss. Selling losers before year-end lets you offset gains you already realized, plus a limited amount of ordinary income, with unused losses carrying forward to future years. Watch the wash-sale rule: if you repurchase the same or a substantially identical security too soon, the loss is disallowed. This is one of the highest-value December moves for investors.
Deductions
4. Bunch Deductions Into This Year (or Next)
With the standard deduction as high as it is, many taxpayers itemize only in alternate years. If you are close to the threshold, “bunching” — pulling next January’s charitable gifts, property tax payments, or medical procedures into December — can push you over the line this year, then you take the standard deduction next year. Run the math both ways before committing.
5. Make Charitable Gifts Strategically
Cash gifts are simple, but donating appreciated stock or fund shares is often smarter: you generally deduct the fair market value and avoid the capital gains tax you would have owed on a sale. If you are over the age threshold for qualified charitable distributions, giving directly from an IRA can satisfy required minimum distributions without increasing your taxable income. A donor-advised fund can also help with bunching: contribute several years’ worth of giving in one December to clear the itemizing threshold, then distribute grants to charities over time. Confirm current age thresholds and limits at irs.gov.
6. Prepay Deductible Expenses
January’s mortgage payment, state estimated taxes, and professional dues paid in December count for this year. The caveat: prepaying state and local taxes only helps if you itemize and are not constrained by the SALT deduction cap — check the current cap before bunching property tax payments.
Retirement
7. Max Out Retirement Contributions
Contributions to 401(k)s and similar employer plans must come out of paychecks received by December 31 — there is no extension. If you have room under the annual limit, increasing your final paychecks’ deferrals is a use-it-or-lose-it move. IRA contributions can wait until the filing deadline, but do not let that become an excuse to skip them.
8. Consider a Roth Conversion
Converting traditional IRA funds to a Roth triggers tax now in exchange for tax-free growth later. It makes the most sense in a lower-income year — exactly the situation item 2 helps you identify. Conversions must be completed by December 31 to count for the year, and the tax is due with the return, so model the cost before pulling the trigger.
9. Take Required Minimum Distributions
If you are subject to RMDs from traditional IRAs or 401(k)s, the distribution must leave the account by December 31. Miss it and the penalty is steep — check irs.gov for the current penalty rate. This is the rare checklist item where doing nothing has an immediate, painful cost.
Business Moves
10. Accelerate Business Expenses and Equipment Purchases
Business owners on the cash method can reduce this year’s income by paying January bills in December, stocking up on supplies, and placing needed equipment in service before year-end. Expensing provisions for equipment change with legislation, so verify what is currently deductible versus depreciable before making large purchases for tax reasons.
11. Review Your Entity Choice
Year-end is the natural moment to ask whether your business structure still fits. An LLC taxed as a sole proprietorship, an S corporation election, and other configurations produce very different tax results as income grows. The S corp question usually turns on whether your profits are high enough that payroll-tax savings outweigh the added compliance costs — salary requirements, separate returns, and stricter formalities. Elections for the coming year have firm deadlines, and switching mid-year creates split-year complications, so start the analysis now rather than in March. Our comparison of LLC vs S corp taxes walks through the trade-offs in detail.
12. Fund a Business Retirement Plan
SEP IRAs, Solo 401(k)s, and similar plans let self-employed taxpayers shelter significant income. Some plans must be established by December 31 even though contributions can come later — another deadline that rewards acting before the holidays. If your business had a strong year, this is often the single largest deduction available to you, and the paperwork takes less time than most owners expect.
State Items
13. True Up State Withholding and Estimated Payments
If you moved, worked remotely across state lines, or had uneven income this year, your state withholding is probably wrong. Review pay stubs now and make a final state estimated payment if needed. Underpayment penalties apply at the state level too, and state estimated deadlines do not always match federal ones. Our guide to avoiding estimated tax penalties covers the mechanics for both federal and state payments. When you are ready to pay, the IRS payments page lists the official options for federal balances; pay state balances through your state revenue department’s portal.
14. Confirm Your Residency Paper Trail
If you moved states this year, December is your last chance to tidy the domicile record: driver’s license, voter registration, and address updates should all reflect the new state before the year closes. A clean year-end snapshot of where you lived — backed by the day-count calendar — is exactly what a future residency audit will ask for. See a dedicated residency rules guide for the full audit-proofing checklist.
Your December Action Calendar
Checklist items are easier to execute when they have dates attached. Here is a practical sequencing for the final month:
- Early December (1st–10th): Run your income projection and decide on income timing moves (items 1–2). Review investment accounts for loss-harvesting candidates (item 3) — brokerage settlement takes a few days, so do not leave trades to the last week. Confirm your retirement plan contribution room and adjust final paycheck deferrals (item 7).
- Mid-December (11th–20th): Execute charitable gifts, especially donations of appreciated securities, which require transfer time (item 5). Make business equipment purchases and place them in service (item 10). If a Roth conversion makes sense, initiate it now — custodians get backlogged at year-end (item 8).
- Late December (21st–31st): Take any remaining required minimum distributions (item 9) — this is the one deadline with no grace period worth counting on. Make final estimated tax payments for both federal and state (item 13). Prepay January deductible expenses you decided to bunch (items 4, 6).
One caution that applies to the whole calendar: tax-motivated moves should still make economic sense on their own merits. Buying equipment you do not need, or harvesting losses only to rebuy at a worse price, can cost more than the tax saved. And because contribution limits, standard deduction amounts, and phaseout thresholds change from year to year, verify every figure against the current year’s IRS publications before you act — last year’s numbers are only a starting point, never a finished plan.
Get Help Where It Counts
15. Know When to Call a Professional
Most of this checklist is DIY-friendly. But if your year included an audit notice, a multi-state move, business tax debt, or a transaction with serious dollars attached, professional advice before December 31 can change the outcome — after the ball drops, the options narrow. Our guide on when to hire a tax attorney helps you decide whether your situation warrants counsel or just a good CPA.
Bottom Line
Year-end tax planning is not about loopholes; it is about timing. Income you can shift, deductions you can bunch, contributions you must make by December 31, and records you should close out cleanly — that is the whole game. Work through these 15 items in the first half of December, confirm the current-year figures at irs.gov, and you will file next spring knowing you left absolutely nothing on the table.
This guide is for general information only and is not tax or legal advice. Consult a qualified tax attorney about your situation.
