It’s easy to assume that the opportunities to optimize your taxes are behind you by the time you hit your 60s. That’s not true because this decade offers some great ways to help your tax planning, especially if you still have a steady income source and are close to retirement. The idea is to focus on moves that will help lower taxes now or to prevent larger tax bills later on. Here are tax strategies you can still make that matter and why they can have a huge impact. Max Out Catch-Up Retirement Contribu ...

Core Insights - Year-end tax planning is crucial for aligning with financial realities and avoiding surprises in tax liabilities, emphasizing the importance of proactive adjustments and strategic contributions [21]. Tax Planning Strategies - **Safe Harbor Payments**: It is recommended to pay either 90% of the current year's tax or 100% of the previous year's tax to avoid underpayment penalties [1]. - **W-4 Adjustments**: Individuals should update their W-4 forms following significant life changes, such as new jobs or income sources, to ensure proper withholding [2]. - **IRS Tax Withholding Estimator**: Utilizing this tool can help individuals compare current withholdings against projected income, allowing for necessary adjustments before year-end [3]. Retirement Contributions - **401(k) Contributions**: For 2025, individuals can contribute up to $23,500 to a 401(k), with additional catch-up contributions available for those aged 50 and older [6]. - **IRA Contributions**: Up to $7,000 can be contributed to a traditional or Roth IRA for the 2025 tax year, with a deadline of April 15, 2026, for contributions to count towards 2025 [6]. - **Health Savings Accounts (HSA)**: Eligible individuals can contribute $4,300 for individuals or $8,550 for families, with additional catch-up contributions for those aged 55 and older [6]. Charitable Contributions - **Documentation for Charitable Giving**: Keeping proper receipts and acknowledgment letters is essential for claiming charitable deductions [8]. - **Qualified Charitable Distributions (QCDs)**: For retirees, QCDs can satisfy required minimum distributions while lowering adjusted gross income [10]. Investment Review - **Capital Gains and Losses**: Reviewing investment portfolios before year-end allows for strategic rebalancing and tax planning, including harvesting losses to offset gains [9][11]. - **Long-term Capital Gains Tax Rates**: These are still taxed at 0%, 15%, or 20% for 2025, with high earners potentially facing an additional 3.8% net investment income tax [9]. Deductions and Credits Organization - **Organizing Deductions**: Proper organization can reveal overlooked deductions and simplify the filing process [10][12]. - **Bunching Charitable Contributions**: This strategy can help exceed the standard deduction threshold, allowing for itemization and maximizing tax benefits [10]. Self-Employment Considerations - **Estimated Payments for Self-Employment**: Freelancers and contractors should ensure they make estimated payments to avoid penalties [17]. - **Retirement Options for Self-Employed**: SEP IRAs and solo 401(k)s allow business owners to contribute a percentage of earnings, reducing taxable income [17]. State and Local Tax Planning - **State Tax Considerations**: Understanding state-specific tax rules and deadlines is essential to avoid penalties and maximize deductions [16][19]. - **SALT Cap Awareness**: The federal deduction for state and local taxes has increased from $10,000 to $40,000 under recent legislation [18]. Professional Assistance - **Seeking Professional Help**: When financial situations become complex, consulting with a tax professional can optimize tax planning and ensure compliance with regulations [20][22].

Smart year-end moves—like upping retirement contributions, using new OBBA tax breaks, and spending your FSA money—can strengthen your financial position heading into 2026. https://t.co/EhQagZQi5b ...

Retirement Account Contributions - For 2025, contribution limits are $23,500 for employees under 50, $31,000 for those 50 and older, and $34,750 for those 60 to 63 [2] - Many individuals save approximately 9% of their income towards retirement, including both employee and company contributions [3] - Increasing retirement savings contributions can lower taxable income for 2025 [3] Affordable Care Act (ACA) & Health Savings Account (HSA) - Enhanced advanced premium tax credits may disappear, potentially increasing premiums for those above 150% of the federal poverty line [6] - When choosing an ACA plan, prioritize the network of doctors over the premium cost [7] - HSA limits are $4,300 for individuals and $8,550 for families [8] - HSAs are designed for long-term healthcare savings, similar to an IRA, and should be invested for growth, such as in an S&P 500 index fund [8][9]

Core Insights - The primary mistake individuals make regarding retirement savings is maintaining flat contribution rates year after year, which can significantly hinder their financial security in retirement [2][3]. Contribution Strategies - A 2024 Federal Reserve survey indicates that nearly half of households have less than $65,000 saved for retirement, highlighting the importance of increasing contributions over time [3]. - For an individual earning $70,000, a constant 3% employee contribution results in only $2,100 saved annually, insufficient for replacing income in retirement [3]. - Maximizing retirement contributions, especially through employer matching, is crucial for financial success during retirement [3][4]. Employer Matching - Employer matching contributions can significantly enhance retirement savings, with a 50% match on the first 6% of pay being a compelling incentive [4]. - Employees not reaching the maximum employer match level miss out on potential "free money," which cannot be recovered later [4][5]. Investment Considerations - Employees should reassess their risk appetite in investments as they approach retirement, considering a balanced portfolio strategy [5][6]. - Investing in assets that provide a steady income stream, such as dividend-paying stocks, money market funds, or bonds, is recommended [6].

Retirement Planning - Pausing retirement contributions can be more expensive than debt [1] - Proven payoff strategies exist to balance debt and retirement savings [1] - Aim to retire stronger by balancing debt payoff and retirement contributions [1]

Saving Strategies & Trends - "Revenge saving" is emerging as people prioritize saving due to economic concerns and inflation, shifting from post-pandemic "revenge spending" [1] - A study indicates that 7 out of 10 Americans are prioritizing emergency savings and changing their savings approach this year to save more [2] - Financial advisors suggest "taking your financial temperature" to gauge savings based on income, expenses, and savings goals, rather than emotions [3][4] - Reverse budgeting is recommended, prioritizing savings goals first and then allocating funds for expenses or discretionary spending [4] - Separating finances into different accounts, such as two checking accounts (one for fixed expenses/long-term savings and another for other expenses), is advised [5] - Automatically increasing savings by 1% every six to twelve months, even from zero, is a manageable way to boost savings [6] - Maximizing retirement contributions to 401(k)s, IRAs, or individual retirement accounts is encouraged [9] Retirement & Emergency Funds - Individuals should check for forgotten 401(k)s from previous employers, potentially worth $90,000 over a lifetime [7][8][9] - Contributing to a Roth IRA is beneficial, as withdrawals are tax-free [10] - A Roth IRA can serve as an emergency fund alternative, allowing contributions to be withdrawn at any time without penalties or taxes [11][12] - While a high-yield savings account is ideal for emergency funds, a Roth IRA can be a viable alternative [13] - The maximum contribution for a Roth IRA is $7,000 [10]

Retirement Contributions - Australian workers will receive more money into their mandatory retirement contributions [1] News Source - Bloomberg provides the best of Australia Briefing from the region and beyond [1]