Tax Planning · By Chad Mangum
Year End Tax Planning Moves to Make Before December
Year End Tax Planning Moves to Make Before December
These year end tax planning moves work best when you start them in October, while several paychecks and many weeks remain to adjust course. Waiting until late December leaves you with few levers, since withholding changes need pay cycles to take effect and some gifts and transfers need days to settle. Starting now gives every move room to breathe.
Think of October as your planning window and November as your action window. In October you project income, review what you already paid through withholding and estimates, and list the moves that fit your situation. In November you execute: fund accounts, schedule gifts, time business costs, and confirm everything posted. December then becomes a calm review instead of a scramble.
Families and business owners across Salt Lake City and greater Utah face the same calendar, and the same federal deadlines apply to everyone. A steady plan beats a frantic finish. Work through the sections below in order, keep notes on what you decide, and you will enter December knowing exactly what remains.
Project Your Full Year Income First
Every good plan starts with a projection, because the right move depends on where you will land. Pull your most recent pay stub, add expected income for the rest of the year, and include side income, interest, dividends, rental income, and any large one time events such as a bonus or a property sale. Then subtract the tax you already paid through withholding and quarterly estimates.
You do not need perfect precision. A projection within a few thousand dollars is enough to reveal the big decisions: whether you will owe or receive a refund, whether you sit near the edge of a tax bracket, and whether extra income this year would cost more than it is worth. Our tax planning services start with this same projection step for every client.
Compare your projection to last year. If income rose sharply, you may need extra withholding or a larger January estimate to stay safe from penalties. If income fell, you may have room for a Roth conversion at a lower rate or for harvesting gains while your bracket is friendly. Write down your expected total income and expected total payments, since every later decision refers back to these two numbers.
Utah filers should project state tax at the same time. Utah applies its own flat individual income tax alongside the federal return, so a move that saves federal tax often saves state tax too. Keep one simple worksheet with federal and Utah columns, and update it once in November when your numbers sharpen.
Adjust Withholding While Paychecks Remain
Withholding is the fastest lever most employees have, and October still leaves enough paydays for a correction to matter. If your projection shows a balance due, file a new W-4 with your employer and request extra withholding per pay period. Divide the shortfall by the number of paychecks left, add a small cushion, and spread the fix over the remaining year.
If your projection shows a large refund, you can reduce withholding and keep more of each check through the holidays. A big refund feels pleasant in spring, but it means you lent money interest free all year. Many Salt Lake City workers prefer to right size withholding and redirect that cash into retirement savings or an emergency fund before December.
Life changes make this review especially important. Marriage, divorce, a new baby, a second job, or a spouse returning to work all change the right withholding amount. Our fall withholding checkup guide walks through the full paycheck review step by step. Pair that guide with this plan and your withholding will enter January on target.
Remember that withholding counts as paid evenly through the year even when you increase it late, which makes it a powerful tool for penalty protection. Estimated payments count only when actually paid, so a late year fix through withholding often works better than a large January estimate alone.
Top Off Retirement Accounts With Tax Benefits
Workplace retirement contributions must come out of paychecks before December 31, so October is the time to check your pace. Look at your year to date contributions, compare them to the annual limit, and divide the remaining room by the paychecks left. Small increases now can add meaningful savings plus a full year of tax deferred growth.
If your employer matches contributions, treat the full match as mandatory. Turning down matching money is the same as declining part of your pay. Confirm you will reach the match threshold by year end, and adjust contributions now if you are behind. Employer plans also let many workers over age 50 add catch up contributions, which repay the effort many times over in retirement security.
IRAs follow a friendlier calendar, since you can fund them for this tax year until next April. Still, funding early gives your money more time to grow, and it clears one task before filing season crowds your schedule. Decide now whether a traditional or Roth contribution fits your bracket, and set the transfer on your November calendar. Details on current contribution rules are covered in our pricing and planning options and in your December review.
Bunch Deductions and Schedule Charitable Gifts
With a generous standard deduction, many households itemize only in years when they concentrate deductions together. This bunching strategy means scheduling two years of charitable gifts, state tax payments, and elective medical costs into a single year so itemized deductions exceed the standard amount. October is the right month to decide whether this year or next year should be your bunching year.
Start by totaling the deductions you already expect: mortgage interest, state and local taxes within the federal cap, and charitable gifts made so far. If the total sits near the standard deduction, a planned push can tip you over. Scheduling an extra gift, paying the January mortgage installment in December, or booking a postponed medical procedure before year end can complete the stack.
Appreciated stock gifts deserve special attention, since giving shares held over a year generally lets you deduct fair market value while skipping the capital gain. Donor advised funds offer similar timing control by bunching the deduction now and distributing gifts to charities later. Charitable plans also need proper receipts, so read our quarterly estimates catch up guide for payment timing and keep every acknowledgment letter in one folder.
Business Owners Should Time Income and Equipment
Self employed readers and small business owners have extra levers that employees lack. Cash basis businesses can shift income by timing invoices and can shift deductions by timing purchases, bill payments, and supply orders. If next year looks busier and higher taxed, accelerating costs into December while deferring late December invoices into January can smooth the burden.
Equipment purchases need a real placed in service date before year end to qualify for this year depreciation. Ordering alone is not enough; the asset must be delivered and ready for use. Review your equipment needs now, get quotes in October, and schedule delivery for early December so a shipping delay cannot ruin the deduction. Keep invoices and delivery confirmations together.
Retirement funding is the other great business lever. Profit sharing and defined benefit contributions tied to this year income can be large, but some plans must exist by December 31 even when funding happens later. Confirm your plan documents are in place now, and calendar the funding deadline. Utah small businesses that pair equipment timing with retirement funding often find their best combined savings in this window.
Build a December Calendar So Nothing Slips
Turn your decisions into dated tasks. Mutual fund distributions, dividend record dates, payroll bonus runs, and custodian transfer cutoffs all cluster in December, and missing one cutoff can cost real money. Write each deadline on one calendar page: gift mailing dates, contribution posting dates, required distribution dates, and the final payroll of the year.
Confirm how each transaction will be completed. Online transfers between your own accounts usually post in a day or two, while rollovers and stock gifts can take a week or more. Charitable gifts by check must be mailed in time to count, and electronic gifts must settle before midnight December 31. Call custodians early to confirm their published cutoff dates rather than assuming the general rule applies.
Finally, schedule a quiet review for the week between Christmas and December 31. Verify that withholding changes appeared on pay stubs, that contributions posted, and that gifts cleared. That single review hour locks in every move you made this fall and hands January a clean file to close out.
Get Year End Help in Salt Lake City
Ready to put these moves into action before December? Contact our Salt Lake City office or call (801) 580 6163, Monday through Friday 8am to 5pm. A 30 minute planning session starts at $250. Starting prices, not an official quote, actual situations may vary. Principal Chad Mangum is an Enrolled Agent with a Master's degree in Taxation, and current clients can send documents through our Client Portal.
Frequently Asked Questions
When should I start year end tax planning?
October is ideal, since withholding changes need pay cycles to work and gifts and transfers need days to settle. Starting in October lets you project income calmly, act through November, and verify everything in December. Late December starts still help, but your options narrow with each passing week.
What is the single most valuable year end move?
For most employees it is fixing withholding while paychecks remain, since that prevents penalties and April surprises. For higher income households it is often retirement funding or bunching deductions above the standard amount. Business owners usually gain most from timing income and equipment together.
Do these moves affect my Utah return too?
Yes. Utah starts from federal figures, so moves that lower federal income or raise federal deductions generally lower Utah tax as well. Utah applies its own flat individual income tax, which makes combined federal and state planning especially worthwhile before December 31.
Talk with a tax professional
If this topic applies to your return, call or send a message and we will point you to the right next step.