20 Questions for Year-End Tax Planning - The Trust Company of Kansas %

The One Big Beautiful Bill Act has added several wrinkles to tax planning. Here are some basic questions to get you started.

What will be your estimated 2025 income? This will determine whether you qualify for several tax breaks.
Did you pay more than $10,000 in state and local taxes this year? The cap for the deduction has been lifted to $40,000.
Should you itemize or use the standard deduction? More than 90% of taxpayers have been using the expanded standard deduction, but lifting the cap on the SALT deduction could affect that calculation.
Should you bunch your deductions? If you are near the boundary for the standard deduction, it may be profitable to accelerate some charitable contributions or medical expenses into one year, itemize deductions that year, and take the standard deduction the next year.
Did you have tip income in 2025? Up to $25,000 of tip income may be tax free, but the benefit phases out at higher income levels.
Did you have overtime pay in 2025? Up to $12,500 of overtime pay ($25,000 for marrieds filing jointly) may be tax free, but again, the benefit phases out at higher income levels.
Have you purchased an American-made new car this year? The interest on a loan for such a purchase may be deductible.
Is the asset allocation in your investment portfolio still consistent with your goals? Strong stock market performance this year may have pushed some portfolios out of balance.
Should you harvest some capital losses to offset realized gains? Up to $3,000 of realized capital losses may offset ordinary income.
Are you 65 or older this year? You may be eligible for an additional $6,000 deduction from income, but this benefit phases out for higher-income retirees.
Have you maximized your 401(k) deferral? One should defer at least enough to secure an employer match in a qualified retirement plan.
Have you made a maximum IRA contribution? Up to $7,000 may be contribution to a traditional IRA, a Roth IRA, or a combination of the two.
Are you eligible for catch-up contributions? For those 50 and older, an additional $1,000 may be contributed to an IRA. An additional $7,500 may be contributed to a 401(k), 403(b), or 457 plan.
Are you eligible for a super catch-up contribution? Beginning in 2025, those who are 60, 61, 62, or 63 have a larger catch-up contribution, $11,250. At age 64 and up, the limit falls back to $7,500.
If you are 73 or older, have you taken your Required Minimum Distributions (RMDs) for the year? RMDs are required from IRAs and from employer retirement plan accounts, such as 401(k) plans.
Should you consider a Qualified Charitable Distribution from your IRA? A direct transfer from an IRA to a charity will satisfy RMD requirements without boosting ordinary income.
Should you consider conversion to a Roth IRA? The conversion is subject to ordinary income tax the year that it is made, but future distributions may be tax-free, and the Roth IRA does not have Required Minimum Distributions.
Have you taken advantage of the annual gift tax exclusion? Up to $19,000 may be gifted to as many beneficiaries as you wish without the necessity of filing a federal gift tax return. A grandparent with four children and six grandchildren could make gifts to each of them, which removes $190,000 from a future taxable estate. Married couples may “split” their gifts, for a total of $38,000 per done. No gift tax will be due, but a gift tax return must be filed in that even.
Has education funding been taken care of? Tax-deferred savings opportunities include the Coverdell Education Savings Account and the 529 plan.
Have you reviewed your will this year? Next year, the amount exempt from federal estate and gift tax goes to $15 million, and this change has no expiration date, unlike earlier increases in this threshold. The exemption is per person, so a married couple has $30 million of tax shelter, and the exemption will be indexed for future inflation. The permanence of this change could have significant ramifications for your estate plan.