Year-End Tax Readiness: Steps to Take Now to Make Filing Easier Next Year

The filing deadline may be months away, but actions you take before December 31 can make a big difference

Even though the April tax filing deadline is still in the future, many important opportunities to reduce your taxable income or prepare your records end on December 31. Once the new year begins, your ability to influence your tax outcome for the prior year becomes much more limited. By addressing certain items now, you can make filing simpler and possibly save money when you submit your return. The steps below apply to federal returns and, in some cases, to North Carolina state returns as well.

Make charitable donations before year-end

Charitable contributions are generally deductible in the year you make them if you itemize deductions. For credit card donations, the date of the charge is what matters. For checks, the postmark date typically determines the tax year. Cash or in-kind donations must be received by the charity by December 31 to count for the current year. If donating physical items, get a dated receipt describing what you gave. Waiting until the last week of December can risk delays, so it is best to donate early to ensure proper documentation.

Contribute to retirement accounts

Most contributions to workplace retirement plans such as a 401(k) or 403(b) must be made by December 31 to count for the current tax year. In 2025, the contribution limit is $23,000 for those under age 50 and $30,500 for those 50 or older, which includes the $7,500 catch-up contribution. Contributions to traditional or Roth IRAs can be made up until the April filing deadline for the previous tax year, but contributing earlier allows more time for investment growth. The IRA contribution limit for 2025 is $7,000, or $8,000 for those 50 or older.

Update your address if you moved

If you changed your address during the year, notify the U.S. Postal Service, your employer, and the IRS. For the IRS, file Form 8822 to ensure tax documents and refunds are sent to the correct location. If you purchased health insurance through the Marketplace, report the move there as well to ensure you remain on an appropriate plan. Some tax documents are not forwarded even if you have a postal forwarding request, so direct updates are essential.

Report any legal name changes

If you changed your name this year, update your records with the Social Security Administration so your name matches IRS and SSA records. This applies to both you and any dependents. Mismatched names can delay tax return processing and refunds.

Renew your ITIN if needed

Your Individual Taxpayer Identification Number will expire if it has not been used on a federal return at least once in the last three years. Certain ITINs issued before 2013 with specific middle digits also expire at year-end. Renewal is done using Form W-7. The IRS typically processes renewals within seven weeks, but during peak filing season or when mailed from overseas, it may take up to 11 weeks. Failing to renew before filing can delay your return and may make you ineligible for some credits.

Locate prior year tax returns

Having past returns on hand can make filing faster and more accurate. You may need your prior year’s Adjusted Gross Income to verify your identity when e-filing. Keeping copies, whether digital or paper, also helps in case of an IRS inquiry or if you need to reference deductions or income from past years. If you use tax software, verify that your prior year’s return is accessible and backed up.

Adjust your withholding

Review your federal and North Carolina tax withholding before the end of the year. Life changes such as marriage, divorce, the birth of a child, or changes in income can affect how much you should have withheld. The IRS provides an online withholding estimator, and the North Carolina Department of Revenue offers its own withholding form (NC-4). Submit any updates to your employer promptly so the changes take effect with your next paycheck.

Consider deferring income

If you expect to be in a lower tax bracket next year, you may benefit from deferring some income until after December 31. This could include delaying a bonus, waiting to bill clients until January, or postponing the sale of assets. For retirement account withdrawals, if you do not need the funds immediately, consider waiting until the next tax year to take a distribution so the income is not taxable in the current year.

Review capital gains and losses

Before year-end, evaluate your investment portfolio to determine whether selling certain holdings could help offset capital gains. Tax-loss harvesting can reduce your taxable investment income, but it must be done before December 31. Be aware of the IRS wash sale rules, which prevent claiming a loss if you buy the same or a substantially identical security within 30 days before or after the sale.

Plan for estimated taxes

If you are self-employed or have income not subject to withholding, review your quarterly estimated tax payments to ensure they are sufficient. Making an extra payment before January 15 can help you avoid penalties for underpayment. North Carolina residents should make sure to cover state estimated taxes as well.

Gather deductible expense records

If you itemize deductions, collect receipts and statements for expenses such as medical costs, mortgage interest, property taxes, and eligible education expenses. Having this organized now will make filing easier and reduce the risk of overlooking deductions you qualify for.

This information is not tax or legal advice

This information is for educational purposes only and does not constitute tax or legal advice. For guidance specific to your situation, consult a qualified tax professional, attorney, or the IRS.