Planning for Year End Success: How to Simplify Tax Season
Starting early can make tax preparation simpler, help minimize tax liabilities, maximize returns, and avoid complications or penalties. Use these time-tested tips now so they become routine for future years.
Tip #1 – Start Early
Initiate tax planning well before the filing deadline to allow time to gather documents, get professional help, and make any tax-related financial moves.
Tip #2 – Gather Tax Documents
Collect essential records so nothing is missed:
- Investment records: sales, dividends, interest, year end brokerage statements
- Retirement and HSA contributions
- Records of deductible expenses and tax credits (mortgage interest, state taxes paid, medical expenses, education, etc.)
- Charity receipts and acknowledgement letters
- Dependent information and last year’s tax return
Keep an annual checklist and update it each year.
Tip #3 – Be Aware of Tax Law Changes
Tax rules change; what applied last year may not apply now. Stay informed or consult a tax/financial professional about limits, caps, and special provisions that affect deduction thresholds, charitable deduction rules, and estate/gift exemptions.
- When changes are pending or phased in consider accelerating or deferring transactions to capture favorable treatment.
Tip #5 – Make Tax-Advantaged Contributions & Other Income Moves
- Tax advantaged accounts:
- Maximize employer retirement plans (401(k), 403(b)) and IRAs when possible to reduce taxable income.
- Contribute to Health Savings Accounts (HSAs) if eligible; these provide triple tax benefits (pre tax contributions, tax free growth potential, and tax free qualified withdrawals).
- Tax loss harvesting:
- Consider selling depreciated securities to realize losses that offset realized gains; excess losses can offset up to $3,000 of ordinary income and carry forward. (IRS, n.d.-e)
- Avoid wash sale rules when repurchasing substantially identical securities.
- Consider timing distributions:
- If you expect lower income this year, taking IRA or 401(k) distributions in a lower bracket year may be beneficial — coordinate with an advisor.
Tip #6 – Donate to Charity Before Year-End
Donations must be made by year-end to affect that tax year. Strategies:
- Bunching charitable contributions:
- Combine multiple years’ worth of donations into one year to exceed the standard deduction and itemize, especially if rules reducing itemized deduction value are forthcoming.
- Donate appreciated assets:
- Gifts of long term appreciated securities to qualified public charities may allow deduction of fair market value while avoiding capital gains tax (subject to AGI limits).
- Cash contributions:
- For itemizers, cash gifts can be deductible up to a specified percentage of AGI (verify current limits).
- Qualified Charitable Distributions (QCDs):
- If you’re age 70½ or older, direct IRA transfers up to the QCD limit to qualified charities can satisfy RMDs without increasing AGI—often more tax efficient than cash gifts. (IRS, n.d.-a; IRS, n.d.-c)
- Document all gifts:
- Obtain contemporaneous written acknowledgements and keep records of asset values and dates.
- Use a Donor Advised Fund to make contribution to maximize tax benefits, then make distributions to 501(c)3 charities in subsequent years.
Tip #7 – Hire a tax professional
A tax professional provides tax advice tailored to your situation. For complex situations, have your tax preparer, financial advisor, and estate attorney coordinate.
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Repeat these steps each year to make tax season easier, reduce stress, and file with confidence.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This material was prepared by Fresh Finance for the Investment Service Center’s use.
With 2026 quickly approaching, many Americans are looking forward to unusually large income tax refunds. Next year, we expect a double-digit percentage increase in average personal income tax refunds due to the backdating of tax cuts from the OBBBA to the start of 2025. The new tax breaks didn’t become law until early July, and even then, tax withholding schedules were not adjusted for this legislation. Consequently, significantly more money than usual has been withheld from taxpayers throughout the year. In 2025, we estimate that 63% of the 165 million filers will receive a refund, with an average income tax refund of $3,200. In 2026, we expect 65% of filers to receive a refund, with an average refund of nearly $3,950.
With the U.S. economy expected to slow in 4Q25, elevated tax refunds will provide significant stimulus in 1H26, boosting both spending and inflation. But when exactly would we expect to see these effects start to show up? As shown in this week’s chart, during the 2024 filing year—the last full filing year for which we have data—61% of refunds were returned to taxpayers by the first week of April. With higher expected refunds and a greater percentage of taxpayers filing electronically, refunds could be even more frontloaded in 2026. Amid the tax refund bonanza, companies could also use the expected consumer spending boost to pass on tariff costs and raise prices, further fanning the inflation flames.
While we don’t expect higher inflation to be sustained throughout next year, investors should continue diversifying across assets that perform well in different inflation regimes, including financials and real assets.
Chart of the Week: Source: IRS, J.P. Morgan Asset Management.
Thought of the Week: Source: IRS, J.P. Morgan Asset Management.
Index: Institute for Supply Management Manufacturing Index; PCE: Personal consumption expenditures; Philly Fed Survey: Philadelphia Fed Business Outlook Survey; PMI: Purchasing Managers' Manufacturing Index; PPI: Producer Price Index; SAAR: Seasonally
Adjusted Annual Rate
MSCI EAFE is a Morgan Stanley Capital International Index that is designed to measure the performance of the developed stock markets of Europe, Australasia, and the Far East.
Bond Returns: All returns represent total return. Index: Bloomberg US Aggregate; provided by: Bloomberg Capital. Index: Bloomberg Investment Grade Credit; provided by: Bloomberg Capital. Index: Bloomberg Municipal Bond 10 Yr; provided by: Blomberg Capital. Index: Bloomberg Capital High Yield Index; provided by: Bloomberg Capital.
Key Interest Rates: 2 Year Treasury, FactSet; 10 Year Treasury, FactSet; 30 Year Treasury, FactSet; 10 Year German Bund, FactSet. 3 Month LIBOR, British Bankers’ Association; 3 Month EURIBOR, European Banking Federation; 6 Month CD, Federal Reserve; 30 Year Mortgage, Mortgage Bankers Association (MBA); Prime Rate: Federal Reserve.
Commodities: Gold, FactSet; Crude Oil (WTI), FactSet; Gasoline, FactSet; Natural Gas, FactSet; Silver, FactSet; Copper, FactSet; Corn, FactSet. Bloomberg Commodity Index (BBG Idx), Bloomberg Finance L.P.
information from FactSet's Pricing database as provided by MSCI. Russell 1000 Value Index,
Style Returns: Style box returns based on Russell Indexes with the exception of the Large-Cap Blend box, which reflects the S&P 500 Index. All values are cumulative total return for stated period including the reinvestment of dividends. The Index used from L to R,
top to bottomare: Russell 1000 Value Index (Measures the performance of those Russell 1000 companies with lower price-to book ratios and lower forecasted growth values), S&P 500 Index (Index represents the 500 Large Cap portion of the stockmarket, and
is comprised of 500 stocks as selected by the S&P Index Committee), Russell 1000 Growth Index (Measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values), Russell Mid Cap Value Index (Measures
the performance of those Russell Mid Cap companies with lower price-to-book ratios and lower forecasted growth values), Russell Mid Cap Index (The Russell Midcap Index includes the smallest 800 securities in the Russell 1000), Russell Mid Cap Growth Index (Measures the performance of those Russell Mid Cap companies with higher price-to-book ratios and higher forecasted growth values), Russell 2000 Value Index (Measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values), Russell 2000 Index (The Russell 2000 includes the smallest 2000 securities in the Russell 3000), Russell 2000 Growth Index (Measures the performance of those Russell
2000 companies with higher price-to-book ratios and higher forecasted growth values).
Past performance does not guarantee future results.
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