Year-End Checklist and Dunlins
In this edition of the Flying Point Update we're going to talk about individual year-end tax planning, the specific moves you should consider making before December 31st, and dunlins. I know, I know. Turkeys are an obvious choice for a pre-Thanksgiving newsletters, but at Will’s insistence, they were the very first animal ever covered in the Flying Point Update. Maybe we’ll revisit them next Thanksgiving.
Top of Mind
We're in that narrow window between Thanksgiving and year-end where tax planning either happens or it doesn't. With the holiday season kicking off, time flies by and taxes are usually pretty low on people’s list of priorities. But then, all of a sudden, the year is over. A few moves in the next five weeks can go a long way towards determining your 2025 tax bill.
There's something clarifying about a hard deadline. Once the calendar flips to January 1st, your 2025 tax situation is locked in. No amount of brilliant strategy or creative thinking in March will change what happened in 2025. This is the distinction I talked about in October’s Fewer Tax Surprises and Red Squirrels issue. Tax planning happens while the year is still unfolding, when we actually have levers to pull. Tax preparation is what happens after the fact, when we're just documenting what already occurred. Right now, in late November, we're still in planning mode. Come January, we shift into preparation mode. The decisions that matter need to happen now.
The good news is that most of the high-impact year-end planning moves aren't particularly complicated. You don't need sophisticated strategies or complex structures. What you need is to actually look at your numbers, understand where you stand, and take a few concrete actions before December 31st. The clients who have the smoothest tax seasons aren't the ones with the most complex plans. They're the ones who do simple things consistently and make a few smart moves at year-end.
This is also why I've been emphasizing proactive planning throughout the year in recent newsletters. We’re going to spend the rest of this newsletter looking at a few simple and concrete actions you can take before year end.
Worth Knowing
Here are some concrete year-end moves worth considering for individuals and families. We’ll cover a few year-end business items in the next issue. This list isn’t exhaustive, nor will all of these apply to your situation, but reviewing the list is a good starting point:
Retirement Contributions: You can contribute up to $23,500 to your 401(k) for 2025 ($31,000 if you're 50 or older). Unlike IRAs which have an April deadline, 401(k) contributions must be made by December 31st through payroll deductions. If you're behind on contributions and have the cash flow, now's the time to increase withholding for your remaining paychecks. Traditional IRA contributions have until April 15th, but Roth IRA conversions must happen by December 31st.
Health Savings Accounts: HSA contributions for 2025 are $4,300 for individuals or $8,550 for families (plus $1,000 catch-up if 55+). Like retirement accounts, HSAs offer triple tax benefits: deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. These are some of the best tax-advantaged accounts available.
Flexible Spending Accounts: Most FSAs operate on use-it-or-lose-it rules. Check your balance and make sure you're not leaving money on the table. Some plans allow small carryovers or grace periods, but many don't. Schedule that dental cleaning or stock up on eligible items before year-end.
Charitable Giving: If you're close to itemizing deductions, consider bunching multiple years of charitable giving into 2025. The standard deduction is $31,500 for married couples filing jointly, so if your itemized deductions (including state taxes, mortgage interest, and charitable gifts) are close to that threshold, strategic timing of charitable contributions can make a difference. Donor-advised funds allow you to take the tax deduction now while distributing the money to charities over time.
Tax Loss Harvesting: Review your taxable investment accounts for positions sitting at losses. Selling these positions allows you to offset capital gains and deduct up to $3,000 against ordinary income, with any excess carrying forward to future years. Just be careful of the wash sale rule. You can't buy back the same or substantially identical security within 30 days.
Estimated Tax Payments: Review your estimated payments and withholding for 2025. Remember the safe harbor rules: if you've paid at least 100% of your prior year's tax liability (110% if your adjusted gross income exceeded $150,000), you won't face underpayment penalties even if you owe a lot in April. If you're short on estimated payments, consider increasing W-2 withholding for any remaining paychecks - it's treated as if it was paid evenly throughout the year.
Roth Conversions: If you have space in your current tax bracket, consider converting traditional IRA money to Roth. You'll pay taxes now, but the money grows tax-free forever. This is particularly valuable in lower income years or when you can stay within your current tax bracket without jumping to the next one.
The important thing isn't to do all of these things - it's to look at your specific situation and determine which moves make sense for you. Some years you might implement several strategies, other years just one or two. What matters is being intentional about it rather than discovering opportunities after they've expired.
Mark Your Calendar
January 15th, 2026: Q4 2025 estimated tax payments due. Even though it's technically for Q4 of 2025, the payment isn't due until January 2026.
January 31st, 2026: Deadline for businesses to issue W-2s and 1099s to employees and contractors.
April 15th, 2026: Tax filing deadline for 2025 returns. Also the deadline for IRA contributions (but not 401(k) or Roth conversions, which must be done by December 31st).
Maine Wildlife Facts
Will, Frank, and I had an interesting encounter with some very enthusiastic bird watchers last week at the mouth of Maquoit Bay. They had impressive spotting scopes set up and were watching a large flock of small shorebirds. They let the boys look through the scopes and explained they were observing dunlins on their southerly fall migration from Arctic feeding grounds.
Dunlins are small sandpipers that breed in the Arctic tundra during summer, then migrate thousands of miles to wintering grounds along both coasts of North America. Maine's mudflats and beaches serve as critical stopover habitat where these birds rest and refuel during their journey south. Most pass through Maine in late October and November.
What's fascinating is how dunlins prepare for migration. They essentially double their body weight before departing, building up fat reserves that fuel non-stop flights of over 3,000 miles. They can't adjust their timeline or delay departure as they're operating on an internal calendar driven by declining daylight and the approaching Arctic winter.
During their stopover in Maine, they're constantly feeding on tiny invertebrates in the mudflats, urgently rebuilding energy reserves for the next leg of their journey. Fortunately for the bird watchers, the birds were so focused on feeding that they completely ignored all of the boys' extremely loud shore-based shenanigans.
These Maine wildlife facts have been brought to you by Will (7) and Frank (3), Flying Point Advisors' on-staff naturalists.
Questions about any of this? Just reach out. I read every email and love hearing from you. Thanks for reading. You'll hear from me again in about two weeks. Have a very happy Thanksgiving.
-Mike
Disclaimer
The Flying Point Update is provided for general educational and informational purposes only. The content in this newsletter reflects my thoughts and observations on tax, accounting, and financial planning topics, but should not be considered personalized tax, accounting, or investment advice for your specific situation.
Tax laws are complex and change frequently. The information presented here is based on current tax law as of the publication date and represents general concepts that may not apply to your circumstances. Every individual and business has unique factors that affect their optimal tax and financial planning strategies.
Before making any financial decisions or implementing any tax strategies discussed in this newsletter, please consult with a qualified tax professional, CPA, or financial advisor who can evaluate your specific situation. If you'd like to discuss how any of these topics might apply to your circumstances, I'm always happy to chat.