Filing-Season Tax Moves: What You Can Still Do in January

As tax season approaches, it’s important to consider ways to save before you file your return. Here are a couple of simple strategies you can follow:

Make Contributions to your HSA

Contributions to your HSA account can be made until April 15th, 2026, with a maximum contribution limit of $4,330 for self-coverage and $8,550 for family coverage. Those above the age of 55 are also able to make catch-up contributions up to $1,000 extra. Keep in mind, this contribution limit applies to both employer and employee contributions. HSA contributions are made pre-tax, meaning these contributions will reduce your taxable income. Additionally, distributions from the HSA account are made tax free if they are spent on eligible expenses. To figure out how much you should contribute before April 15th, retrieve a year-to-date statement at the end of December, and subtract any contributions that were claimed on your 2024 tax returns - then contribute up to your applicable limit. HSAs are a great way to reduce taxable income as well as take advantage of a great savings strategy for health care expenses.

Maximize Retirement Contributions

Traditional 401(k) and IRA contributions are made pre-tax and reduce taxable income by deferring tax until the funds are withdrawn. The maximum contribution for 401(k) and 403(b) plans is $23,500 and individuals 50 years or older can make up to an additional $7,500 of catch-up contributions. For traditional IRAs, the maximum contribution limit is $7,000, or $8,000 for individuals 50 years or older. Keep in mind, if you and/or your spouse are covered by an employer retirement plan, these contributions may be limited if your income exceeds certain levels.

For those who are age 73 or older, avoid penalties by taking required minimum distributions from traditional 401(k) and IRAs. You must begin making RMDs by April 1 of the year after you turn 73, afterwards the deadline becomes December 31. To determine your RMD, you divide the value of your retirement account by a life expectancy factor as determined by the IRS. There are many RMD calculators available online.

Take Advantage of Bonus Depreciation

For self-employed business owners, consider making any necessary property and equipment purchases sooner rather than later. The One Big Beautiful Bill Act made permanent the 100% bonus depreciation deduction for property acquired after January 19^th, 2025. If you think there may be equipment replacements needed soon, consider making those purchases before year end to take advantage of this deduction.

Discuss Tax Planning with your CPA

No one likes surprises on Tax Day. Consider reaching out to your CPA for tax planning to help get a good idea of what your tax liability or refund may look like. Effective tax planning can help uncover additional strategies to save before year end. Additionally, it is never too soon to begin compiling your financial data for your tax preparer. Make sure to include all sources of income during the year, as well as any charitable contributions, unreimbursed medical expenses, education expenses, interest paid on mortgages, etc. If you think you may owe, consider setting funds aside now so you are prepared.