Year-end Reviews with Together Planning

Temperatures have dropped, tax returns have been filed (even the extensions!), and the holidays are approaching. We are turning our attention to year-end tax-planning reviews with our clients and helping with open enrollment decisions.

We use a checklist to review your accounts for tax planning opportunities, whether you are in a high-income year or a low-income year. We start by reviewing your 2025 tax situation and marginal brackets. If you are likely to have a similar income in 2026, we can make recommendations based on your 2025 return. If you have had a job change or another income change in 2026, we will need to get the updates from you to create a more accurate tax planning scenario for 2026 to make recommendations.

If you have a taxable account with us, we ask ourselves the following questions as we prepare your tax letter and our recommendations:

1. Did you have a tax loss carryforward on last year’s return? If so, that can be used to offset taxable gains in the current year.
2. Have you realized any taxable gains or losses so far in 2026?
3. Are there any holdings with unrealized losses that could be harvested to reduce taxable income?
4. Would it be possible to realize gains for 0% tax this year? In low income years, it can be prudent to realize gains and increase your cost basis in holdings to reduce taxable gains in the future.
5. Have you made charitable gifts? If you use the standard deduction and also make charitable gifts, it might make sense to open a Donor Advised Fund to take a greater itemized deduction every few years and then use the fund to make your gifts in the other years. In order to take a deduction in 2026 for charitable gifts, the gift must be made before December 31. If you are interested in setting up a Donor Advised Fund to make a 2026 contribution, that process needs to begin in November. 

If you are still working, we look to make sure that:

1. You are contributing as much as you can to your employer’s retirement plan.
2. If you are eligible to contribute to an HSA, you are contributing as much as you can.
3. If your income allows you to make deductible IRA contributions or Roth IRA contributions, you are aware of that option and are contributing as much as cash flow allows.

If you are retired, or if you have Required Minimum Distributions:

1. Your required minimum distribution has been satisfied, or we have a plan in place to distribute the funds before December 31. 
2. We track Qualified Charitable Distributions from your IRAs or Inherited IRAs, and we let you know if we think this is a good strategy for you. If you have reached age 70.5, you can use your IRA to make charitable contributions. This allows you to take money from your IRA without including it in taxable income. This is a particularly good strategy for those using the standard deduction on your tax return.
3. We look at whether a partial Roth conversion makes sense for you this year. We will look at how much room there is in your tax bracket, while avoiding higher Medicare premiums.

Other items to keep in mind for Quarter 4:

Annual Gift Limits

If you are concerned about estate taxes in the future (estate taxes apply to estates larger than $15 million per individual and $30 million per couple), you might want to make annual gifts that fall below the annual exclusion amount. These gifts do not count toward the lifetime exclusion amount for estate taxes. For 2026, you can make gifts of up to $19,000 to another person or $38,000 to another couple without triggering gift tax reporting requirements. If that is part of your planning strategy, be sure to make the gifts by December 31. 

Use FSA Dollars

For FSA (Flexible Spending Accounts) and Dependent Care FSA accounts, the deadline to contribute and to use the funds is December 31. Some FSA plans allow up to $660 to be carried over to the next year, but many don’t. Use your FSA funds and Dependent Care FSA funds this quarter.

Complete Open Enrollment

Many employers have already closed their open enrollment windows for employee benefits. Open enrollment is still ongoing for Marketplace plans, but you need to sign up by December 15 for coverage to begin on January 1. Medicare open enrollment ends on December 7. If you need help evaluating your options, please reach out to us ASAP!