Proactive Year-End Tax Planning Services
CFP® Certified Financial Planners Serving San Diego & La Jolla
Your Year-End Tax Planning Checklist
Tax-Loss Harvesting
If you hold investments in a taxable account that are currently worth less than what you paid for them, you can sell those positions to realize a loss and use that loss to offset realized gains elsewhere in your portfolio, potentially reducing your net taxable gain for the year.
The proceeds can be immediately reinvested in a similar, but not identical, investment to maintain your portfolio's exposure. The result is a smaller tax bill with limited meaningful change to your investment position.
At Canter Wealth, we monitor portfolios year-round for harvesting opportunities as markets create them, not just in December. But the year-end deadline makes November and December a critical window to aim to capture any remaining losses before they reset.
In California: Capital gains are taxed as ordinary income at rates up to 13.3%. Every dollar of harvested loss offsets a dollar of gain that would have been taxed at that rate. The value of harvesting is higher here than in almost any other state.
Roth Conversion - Last Chance for the Tax Year
December 31 is the deadline for Roth conversions to count in the current tax year. If you are in a lower-income year, or if you have room in your current tax bracket before the next threshold, this may be a good time to convert at today's tax rate.
Converting pre-tax IRA or 401(k) funds to Roth means paying tax on the converted amount now, in exchange for tax-free growth and tax-free withdrawals in retirement. For California retirees, where traditional IRA withdrawals are taxed as ordinary income at up to 13.3%, converting during a low-income window can represent significant lifetime tax savings.
Key considerations before converting:
- How much room do you have before reaching the next federal bracket?
- Would the conversion push you over an IRMAA threshold for Medicare
premiums two years from now? - Do you have funds outside the IRA to pay the conversion tax?
Review Estimated Tax Payments
If you have significant investment income, self-employment income, or IRA distributions during the year, you may owe estimated taxes. The fourth-quarter estimated payment is due January 15, but reviewing your total tax picture in December can allow you to adjust withholding or make an additional payment to avoid underpayment penalties before year end.
California has its own estimated tax requirements separate from federal. Underpayment of California estimated taxes can trigger state penalties in addition to federal ones.
Required Minimum Distributions: Confirm Before December 31
If you are 73 or older, your Required Minimum Distribution must be taken by December 31 or you face an excise tax of 25% of the shortfall. Missing an RMD is one of the most expensive mistakes a retiree can make and one of the most avoidable.
If you have multiple IRA accounts, your total RMD can be taken from any one account or spread across multiple accounts, but the total must be satisfied.
Qualified Charitable Distribution Opportunity: If you are age 70½ or older, you can donate up to $111,000 directly from your IRA to a qualified charity. The QCD satisfies your RMD obligation and is excluded from your taxable income entirely eliminating both federal and California state tax on that amount.
Charitable Giving — Maximize Before December 31
Charitable contributions are deductible only in the year they are made. December 31 is the deadline. Two strategies worth considering before year end:
Donor-Advised Fund (DAF) Contribute appreciated securities or cash to a Donor-Advised Fund before December 31 to take the deduction this year, even if you distribute the funds to specific charities over the next several years. This is especially useful in high-income years, business sales, large Roth conversions, or significant capital gain events, where the deduction is most valuable.
Donate appreciated securities directly Donating shares of appreciated stock directly to a charity eliminates the capital gain entirely. You never pay tax on the appreciation, and you receive a deduction for the full fair market value. In California, where capital gains are taxed as ordinary income, this strategy is especially valuable.
Review Capital Gains and Income for the Year
Before year end, review your total realized gains and losses for the year across all taxable accounts. If you have net gains, consider whether additional loss harvesting opportunities exist. If you have net losses, consider whether you want to realize additional gains before year end, particularly long-term gains that would be taxed at lower federal rates.
Also review any planned transactions in early next year — selling a property, exercising stock options, or taking a large IRA distribution — that might be better timed before or after December 31 based on your current-year income picture.
IRMAA Planning: Manage Your Medicare Premiums
Medicare Part B and Part D premiums are based on your Modified Adjusted Gross Income from two years prior. A large Roth conversion, capital gain, or RMD in 2026 can trigger higher Medicare premium surcharges in 2028.
IRMAA thresholds in 2026 start at $109,000 for single filers and $218,000 for married filing jointly. Before executing large year-end transactions, model your 2026 MAGI against these thresholds to avoid crossing into a higher surcharge tier unnecessarily.
Max Out Retirement Contributions
Contributions to employer-sponsored plans like 401(k)s must be made by December 31 for the current tax year. IRA contributions can be made until the tax filing deadline in April, but contributing early maximizes the compounding period.
2026 contribution limits:
- 401(k), 403(b), 457: $24,500 per person ($32,500 if age 50 or older), ($35,750 age 60–63 super catch-up)
- IRA: $7,500 per person ($8,600 if age 50 or older)
- HSA: $4,400 individual / $8,750 family
Review Your Withholding for Next Year
HSA Contributions — Use It or Lose It Doesn't Apply
Year-End Planning Looks Different in California
Year-End Planning Looks Different in California
California's tax rules create both distinct challenges and unique opportunities at year end.
No preferential capital gains rate: California taxes long-term capital gains as ordinary income at rates up to 13.3%. This makes tax-loss harvesting more valuable here than in states with lower or no income tax. Every dollar of loss can offset a dollar of gain that would have been taxed at full ordinary income rates.
Roth conversions are taxed at full California rates: A $100,000 Roth conversion in the 9.3% California bracket means $9,300 in state tax on top of federal. Size conversions carefully against both federal bracket ceilings and IRMAA thresholds.
California has no standard deduction benefit for most retirees: The California standard deduction is significantly lower than the federal standard deduction: $5,706 for single filers and $11,412 for married couples filing jointly. For California retirees with large itemized deductions, this can mean a larger state tax bill than anticipated.
Year-End Planning
Compensation
Fee-Only
We are compensated only by our clients. No commissions, no product revenue, no referral fees. This is what we believe makes objective tax planning possible — we have no financial incentive to recommend anything other than what is best for your tax situation.
What fee-only means →Legal Standard
Fiduciary
As a Registered Investment Advisor, we are legally required to act in your best interest at all times. That obligation extends to every tax planning recommendation we make.
What fiduciary means →Credential
CFP® Professionals
Every Canter Wealth advisor holds the CFP® designation. The CFP® curriculum covers tax planning as one of its core competencies — not as an afterthought.
About the CFP® credential →FAQs About Year-End Tax Planning
October is the ideal time to begin. By then you have enough
of the year behind you to project your income and tax liability
accurately and enough time remaining to act. Waiting until
December could limit your options and increases the risk of missing
deadlines.