December’s here, and if you’re like most people, taxes are probably the last thing on your mind between holiday shopping and family gatherings. But here’s the thing: you’ve still got time to make some smart moves that could put real money back in your pocket come April.
The key is knowing which actions actually matter for your tax situation. You don’t need to be a financial wizard—just a few strategic decisions before the ball drops on New Year’s Eve could save you hundreds of dollars.
Max Out Your IRA Contributions
You actually have until April 15 to contribute to an IRA for the current tax year, but don’t wait. If you’re eligible for a traditional IRA deduction, putting in even $1,000 before year-end could save you $220 if you’re in the 22% tax bracket.
For 2024, you can contribute up to $7,000 ($8,000 if you’re 50 or older). Even if you can’t hit the maximum, every dollar you contribute reduces your taxable income dollar-for-dollar.
Quick check: Make sure your income qualifies you for the deduction if you or your spouse has a retirement plan at work. The IRS has income limits that phase out the deduction.
Use Up Your FSA Balance
Flexible Spending Accounts are use-it-or-lose-it, and many plans have December 31 deadlines. If you’ve got money sitting in your FSA, you’re literally about to forfeit it.
Easy ways to use FSA funds:
- Stock up on eligible over-the-counter medications
- Get new glasses or prescription sunglasses
- Schedule that dental cleaning you’ve been putting off
- Buy a new blood pressure monitor or diabetic supplies
Most FSA debit cards work at pharmacies, and many online retailers flag FSA-eligible items. Don’t leave money on the table.
Bunch Your Charitable Donations
If you’re close to the standard deduction ($14,600 for single filers, $29,200 for married couples in 2024), bunching donations into one year can push you over the threshold and let you itemize.
Instead of giving $100 monthly to charity, consider making your entire 2025 commitment before December 31. That $1,200 donation, combined with other itemizable expenses, might get you over the line.
What counts:
- Cash donations to qualified charities
- Donated goods (get a receipt and fair market value)
- Mileage driven for volunteer work (14 cents per mile)
Just make sure donations are completed by midnight on December 31—charges that post in January don’t count.
Review Your Capital Gains and Losses
If you have investments in a taxable brokerage account, take a look at what’s up and what’s down. Selling losing investments before year-end creates tax losses that offset your gains—and if losses exceed gains, you can deduct up to $3,000 against ordinary income.
Let’s say you have a stock that’s down $1,500. Selling it before December 31 could reduce your tax bill by $330 (at the 22% rate). You can even buy back similar investments after 30 days if you want to maintain your market position.
This strategy doesn’t make sense if it conflicts with your investment goals, but if you were planning to sell anyway, timing matters.
Increase Your 401(k) Withholding
If you get paid before year-end, you can still increase your 401(k) contribution for those last paychecks. It’s one of the fastest ways to lower your taxable income.
For 2024, the contribution limit is $23,000 ($30,500 if you’re 50+). Even an extra $500 contribution saves you roughly $110 in taxes if you’re in the 22% bracket—and you’re investing in your future at the same time.
Contact your HR department ASAP, as there may be processing deadlines before the actual end of the year.
The clock’s ticking, but these moves don’t require complex planning or big life changes. Pick the one or two that fit your situation, take action before December 31, and you’ll start 2025 knowing you made smart decisions for your money.
