What year-end moves should I make to lower my 2025 tax liability? Looking for tips!
Hey everyone, I'm scrambling a bit as December is flying by, and I just realized I should probably be doing something to reduce my taxes for next year. My situation changed a lot this year - got promoted at work with a decent salary bump (yay!), but also bought my first house and started putting some money into the stock market. I haven't really done much tax planning before since I usually just took the standard deduction, but with the mortgage interest and everything else, I'm wondering if I should be making some moves before December 31st. I've heard about things like retirement contributions, charitable donations, and maybe prepaying some expenses? But honestly I'm not sure what's worth doing or what would actually help my specific situation. Would appreciate any advice on what tax-saving actions I should prioritize in these last few weeks of the year! Thanks in advance!
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Sophia Miller
Year-end tax planning is definitely smart, and it's not too late! Here are some of the most effective things to consider: First, max out your tax-advantaged retirement accounts if possible - 401(k), IRA, HSA if you're eligible. These contributions reduce your taxable income dollar-for-dollar. With your new home purchase, you're likely itemizing deductions now. Consider bunching deductible expenses into this year - paying January's mortgage payment in December gives you an extra month of interest deduction. Same goes for property taxes if your state/local tax cap isn't reached. For your investments, look at tax-loss harvesting if you have any positions at a loss. You can offset capital gains or up to $3,000 of ordinary income. Charitable donations are another good option - cash, appreciated stocks, or even household items to Goodwill all count as deductions if you itemize.
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Mason Davis
•This is really helpful but I'm confused about the tax-loss harvesting thing. If I sell some stocks that went down, how exactly does that help me? And does it matter if I've held them less than a year?
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Sophia Miller
•When you sell investments at a loss, you can use those losses to offset any capital gains you've realized this year. If your losses exceed your gains, you can use up to $3,000 of remaining losses to reduce your ordinary income. The holding period does matter for how the losses are applied. Short-term losses (held less than a year) first offset short-term gains, and long-term losses first offset long-term gains. After that, net losses of either type can offset the other type of gain. Just be careful of the "wash sale" rule - if you buy the same or very similar investment within 30 days before or after selling at a loss, you can't claim that loss for tax purposes.
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Mia Rodriguez
I was in a similar spot last year and found this tax planning tool at https://taxr.ai that seriously saved me thousands. It analyzed all my accounts and documents and showed me exactly what moves would have the biggest impact for MY specific situation. Some general advice is good but everyone's tax situation is different. This tool found deductions I had no idea about - like the fact I could still contribute to last year's IRA until April while getting the tax break on last year's return. Worth checking out with just a few weeks left in the year.
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Jacob Lewis
•Does this actually work for more complex situations? I've got rental property income, some side gig stuff, and investments. Most tax tools I've tried are pretty basic. Will it actually tell me specific actions to take before year-end?
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Amelia Martinez
•I'm always skeptical of online tax tools. How is this different from TurboTax or other tax software? Does it actually connect to your accounts or do you have to input everything manually?
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Mia Rodriguez
•It handles complex situations really well. I've got a small business and investments, and it was able to analyze everything and provide specific recommendations. Unlike basic calculators, it looks at your whole financial picture and suggests personalized strategies for your specific income streams, including rental properties and side gigs. The main difference from regular tax software is that it's focused on planning and optimization rather than just filing. You can connect accounts directly or upload documents, which saves a ton of time compared to manual entry. It also shows you the exact tax impact of different scenarios in real-time so you can see exactly how much each move will save you before you make it.
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Jacob Lewis
Just want to follow up about that https://taxr.ai site another user mentioned. I was skeptical but gave it a try last week and it was eye-opening. The tool found that I could still set up a Solo 401(k) for my side gig before December 31st (something I had no idea about) and potentially shelter almost $22,000 from taxes. Also recommended bunching my charitable donations into this year since I'm just barely over the standard deduction threshold. The personalized recommendations were actually really helpful with just a couple weeks left in the year. Definitely better than the generic advice I was getting elsewhere.
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Ethan Clark
If you're dealing with any tax issues from previous years or need to talk to someone at the IRS before making year-end moves, try https://claimyr.com - it saved me HOURS of hold time. I had questions about how some prior year stuff would affect my year-end planning and needed to talk to an actual IRS agent. Was dreading the typical 2+ hour wait, but this service got me connected in like 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. They wait on hold with the IRS for you and call you when an agent picks up. Super helpful when you need answers fast before making financial decisions.
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Mila Walker
•Wait how does this actually work? Do they have some special connection to the IRS? I've literally spent entire afternoons on hold before.
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Logan Scott
•This sounds like BS honestly. Nobody can magically skip the IRS phone queue. They probably just hire people in low-wage countries to sit on hold all day. I'd be worried about security too - are they listening to your call with the IRS?
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Ethan Clark
•No special connection to the IRS - they just have a system that waits on hold for you. You register your call with them, and their automated system sits in the queue. When an IRS agent picks up, they call your phone and connect you directly to that agent. It's basically just saving you from having to personally wait on hold. They don't listen to your call at all. Once you're connected with the IRS agent, it's just you and the agent talking directly. There's no third party involved in the actual conversation. The system just bridges the call and then gets out of the way. They're just solving the hold time problem, not trying to be involved in your tax discussion.
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Logan Scott
I need to publicly eat my words about that https://claimyr.com service. After my skeptical comment I actually tried it yesterday because I was desperate to ask about deducting some business expenses before year-end. Was expecting it to be useless but holy crap it actually worked exactly as described. Registered my call, went about my day, and got a call back when an IRS agent was on the line. Total game changer compared to the 3+ hours I spent on hold last month. The agent helped confirm which expenses I could prepay this month to get on this year's taxes. Just wanted to update since I was so wrong!
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Chloe Green
Don't forget about FSA accounts if your employer offers them! You need to spend all the money in them before year end (or the grace period if your plan offers one) or you lose it. Great way to pay for medical expenses with pre-tax dollars. Also, if you have an HSA, max that out if possible - those contributions are deductible and the money never expires.
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Lucas Adams
•Isn't December 31st also the deadline to contribute to an HSA for this tax year? Or can you still add money until the tax filing deadline like with an IRA?
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Chloe Green
•For HSAs, you actually CAN contribute until the tax filing deadline (typically April 15th) for the previous tax year, similar to IRAs. So you have until April 2026 to make 2025 contributions. For FSAs though, the December 31st deadline is still important because most plans require you to use the funds by year-end, though some offer a grace period or a small rollover amount. Check with your specific plan to see what options you have.
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Harper Hill
One thing nobody mentioned yet is estimated tax payments for self-employment or investment income. If you've had a good year with extra income, you might need to make a Q4 estimated payment by January 15th to avoid penalties. This isn't technically a "tax reduction" strategy but can save you money in penalties!
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Caden Nguyen
•Good point! I got hit with a penalty last year because I didn't realize this. Is there any kind of safe harbor rule that helps avoid the penalty even if you owe a lot?
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Avery Flores
If you have kids, look into contributing to a 529 college savings plan before year end. Many states offer tax deductions for contributions. Also, review any medical procedures you might need - sometimes it makes sense to bunch them in December if you're close to exceeding the medical expense deduction threshold (which is 7.5% of your AGI).
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