12 Days of Accounting Tips for the End of the Year

While taking time to review important financial information and tax decisions at the end of the year may not make ten lords leap or nine ladies dance, it can help build confidence for the upcoming tax season and next fiscal year. From maximizing deductions, to reminders about deadlines, taking advantage of year-end tax strategies will ensure that your finances are as well-prepared as your holiday celebrations. So, before you’re caught up in the whirlwind of eleven pipers piping or twelve drummers drumming, take a moment to review our 12 Days of Accounting Tips and you’ll be left feeling like you just won five golden rings.

1. Individuals – Max out 401(k) or IRA Contribution for 2024.

One of the best gifts that anyone can give themselves and their family is knowing that they have enough money set aside to fund their retirement. Contributing as much as possible now helps build the value of retirement accounts in the short and long term, as the more that is contributed now, the more that can be earned through compound interest on the investments in the future. Furthermore, contributing to 401(k)s and IRAs can lead to potential tax deductions come April.

Individuals should start by checking in on their current 401(k) and IRA contributions for the year. Once these values are known, then find the difference between what the IRS limit is and what has already been contributed. Contribute the difference if possible, or contribute as much extra as possible if the full amount can not reasonably be contributed. 

Use the table below to check out different types of 401(k) and IRA plans and the IRS contribution limit for 2024.

Retirement Plan	2024 Limit	Additional Catch-up Contribution (for people 50 and over)	Contribution Deadline for 2024
401(k) & 403(b)1	$23,000	$7,500	Dec 31, 2024
SIMPLE 401(k)2 (Savings Incentive Match Plans for Employees)	$16,000	$3,500	Dec 31, 2024
Solo 401(k)3	$23,000 as individual (Total contributions can not exceed $69,000.)	$7,500	Dec 31, 2024
Traditional & Roth IRA4	$7,000	$1,000	April 15, 2025
SIMPLE IRA5 (Savings Incentive Match Plans for Employees)	$16,000	$3,500	April 15, 2025
SEP IRA6 (Simple Employee Pension)	$69,000 or 25% of compensation, whichever is smaller.	Not usually allowed	April 15, 2025

2. Businesses – Complete FinCEN registration by December 31.

If you are a business owner who created their business before 2024, be sure to file your Beneficial Ownership Information with the Financial Crimes Enforcement Network (FinCEN) before the deadline on January 1, 2025.

Starting in 2024, corporations, limited liability companies (LLCs), limited partnerships, and other entities that file formation papers with a state’s Secretary of State’s office (or similar government agency) must file a report with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) providing specified information regarding the entity’s “beneficial owners.”

This is part of the federal government’s anti-money laundering and anti-tax evasion efforts and is an attempt to look beyond shell companies that are set up to hide money. The willful failure to report information and timely update any changed information can result in significant fines of up to $500 per day until the violation is remedied, or if criminal charges are brought, fines of up to $10,000 and/or two years imprisonment. These penalties can be imposed against the beneficial owner, the entity, and/or the person completing the report.

Beneficial owners are broadly defined. This can include owners who directly or indirectly own at least 25% of the entity’s ownership interests, or those who exercise substantial control over the reporting company (even if they don’t actually have an ownership interest). While this may seem to only impact a few significant owners, it can encompass many senior officers of the business, as well as those individuals who are involved in any significant business decisions (e.g., board members). Given the severity of the fines, it may be safer to err on the side of over inclusion rather than under inclusion.

3. Individuals and Businesses – Donate to charities.

Donating to charities can not only help people in need, but it can help save some money on taxes. Donations are often tax deductible, if the value of what is donated is recorded and the donation goes to a qualifying organization. So, help out a community in need this year!

December 3, 2024 is the National Day of Giving, or “Giving Tuesday.”

Here are some tips to help make sure donations are tax deductible:

• Ensure that the charity that is being donated to is a qualified organization (List Here)
• Make sure that the organization donated to provides a receipt of the donation for your records. (Donors who donated $250 or more are required to obtain a donation receipt.)⁷
  • Donation receipts should include the name of the organization, the amount of a cash contribution, a description of non-cash contributions, and a statement that no goods or services were received in return.⁸
• Donating money is usually the most straightforward method of donation since the value (or dollar amount) of what is being donated is clear.
• If purchasing items to donate, such as food items or toys, make sure to purchase these items separately and keep the receipt so that the fair market value of the goods is recorded.
• If donating used goods, get written, professional appraisals of the items donated, if planning to claim the deduction.

4. Individuals – Maximize medical deductibles by scheduling medical appointments and procedures before the end of the year.

Medical visits and medication costs can add up quickly throughout the year. For some, this adding up of costs means that individuals have met their medical insurance plan’s cap for what they can pay out of pocket. If that’s the case, then the end of the year is the time to schedule appointments or procedures while they are fully covered by insurance.

For others though, going to the doctor may still cost a co-pay or an out of pocket fee. Even if an individual has to pay a portion of the cost for medical care at the end of the year, it can still be worth it to schedule appointments before the end of December to maximize medical and dental expense deductions on taxes in April.

Individuals that have to pay any medical or dental costs out of pocket at any point throughout the year can claim IRS deductions for these expenses on their taxes. The deductions for medical and dental expenses apply to an individual as well as their spouse and dependents, for any expenses not compensated by insurance or otherwise. Medical expenses that qualify include “payments for diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body.”⁹ This includes a wide range of services, including seeing nontraditional medical practitioners. For a list of deductible medical expenses, please visit the IRS website.

So, before the end of the year is out, go get one last check-up and make the most of your insurance coverage and/or tax deductions.

5. Individuals and Businesses – Ask us about year-end tax planning.

With the end of the year approaching, now is the ideal time to review end of the year tax strategies and start planning for the next year. Being proactive with tax planning can help reduce tax bills, increase the chances of a refund, and help make smart financial decisions.

Consulting an experienced tax professional can help provide peace of mind. Give us a call today to learn more about how Nottingham and Associates can help you make the most of your taxes.

Let us help you review your current tax situation. We can help you understand how major life changes, such as a change in filing status, starting or selling a business, buying or selling real estate, realizing investment gains or losses, and other factors will impact your taxes.

6. Individuals – Take stock of investments and consider tax loss harvesting.

Tax loss harvesting is the process of selling investments that are down, in order to offset realized investment gains. This helps reduce the net capital gains reported on taxes for the year and can help reduce the amount of taxes owed.

There are two types of investment gains and losses. Short-term capital gains and losses are those realized on investments that have been owned by an individual for one year or less. Long-term capital gains and losses are those realized on investments owned by an individual for more than one year. The tax rate for short-term capital gains is higher than the tax rate for long-term capital gains.¹⁰

When taking stock of investments, consider what types of gains and losses have been realized throughout the year and if they are short or long term. Capital losses must first be applied to offset capital gains of the same type before any excess capital losses can be applied elsewhere. For instance, capital losses on short-term investments must first offset short-term capital gains before they can offset long-term capital gains.

While tax loss harvesting can be beneficial for taxes, it should first and foremost continue to support your investment portfolio and goals. Just be aware when reinvesting the funds of the Walsh-Sales Rule that prohibits the purchase of the same or “substantially identical” investment within 30 days of a sale.¹¹

If unsure about how to make the most of tax-harvesting, contact us or your investment advisor to help.

7. Businesses – Pay estimated tax payments to the IRS by December 15, 2024.

Estimated tax payments are due by December 15 for corporations.

8. Businesses – Review profits for the year and consider fixed asset purchases.

If profits allow for it, businesses in need of updating or purchasing new fixed assets should consider buying these items before the end of the year. Fixed assets are long-term, tangible property that a business uses in its operations, such as buildings, computers (or other technology), software, furniture, machinery, vehicles, etc.

Businesses that purchase equipment before the end of the year may be able to deduct the expense of the fixed assets purchased on their taxes. The IRS currently allows “first year expensing”, which means that these assets can be deducted from a business’s income in the tax year that the item was purchased. This can help offset some of the taxable income of the business and help reduce the amount of taxes owed while businesses get the equipment that they need. There are also potential first-year bonuses on the depreciation of such fixed assets, which can help increase the amount of deductions.¹²

Having an accountant review a business’s books before making new fixed asset purchases is recommended. There are annual limits and restrictions for these deductions. Speaking with a tax professional can help with planning out these purchases so that they fall within the limits while maximizing tax deductions.

9. Individuals – Make any state or local estimated tax payments before December 31st.

State and local taxes, including estimated tax payments, that are paid within a year are able to be deducted on the federal tax return for that year.¹³ This means that making a fourth quarter estimated tax payment to the state before December 31st will enable individuals to claim it as a deduction on their taxes in April.

According to the Internal Revenue Service (IRS), “as an individual, the deduction of state and local income, general sales, and property taxes is limited to a combined total deduction of $10,000.”¹⁴

California residents may pay their fourth estimated tax payment online or by mail. The deadline for California fourth quarter estimated tax payments is January 15, 2025,¹⁵ although paying them before December 31st will allow individuals to claim the tax payment on their federal return. To pay yours today or learn more about California estimated tax payments, please visit the link below.

10. Individuals – Plan out financial gifts to family members.

During the holidays is usually a time where family members give gifts, including larger sums of money. Before giving any monetary gifts to family, it is important to know how this can impact an individual’s taxes and plan accordingly.

The gift tax is a tax that is charged on any type of property (including money) that is transferred from one individual to another while receiving nothing, or less than full value of the gift, in return.¹⁶ The person giving the gift is usually responsible for paying the gift tax.¹⁷ Some gifts, such as money to cover tuition expenses or medical expenses, donations to political organizations, and donations to qualifying charities are excluded from the gift tax.¹⁸

The IRS usually does not require an individual to pay taxes on gifts under $18,000 to any one recipient during a year.¹⁹

So, when making your lists this season, it can be helpful to consider if any other gifts were given throughout the year and ensure that the total amount given to any one family member is less than $18,000 to avoid paying gift taxes in April.

11. Individuals – Review and correct information with financial institutions that will provide tax forms.

Got married this year? Changed a name? Moved to a new location? If any changes like this occurred during the past year, now is the time to update all of the information on file with any institution that may send a tax form.

It can be really easy to forget to update things like addresses or names with institutions that send paperless statements or documents infrequently. Take the time to review and update any information now so that important tax documents can get to you in a timely manner and match the new information that will be going on your tax return in the spring.²⁰

12. Individuals – Review and update Employee Withholding Certificate (W-4) for 2025.

The Employee Withholding Certificate, also known as form W-4, helps an employer calculate the correct amount of federal income tax to withhold from an employee’s paycheck.

A W-4 may need to be updated for a variety of reasons. For example, if an individual experiences a change in their income, they may want to review and update their withholding. If working more than one job or side-gigs, review the withholdings for all income streams and adjust as needed. Having or adopting children, as well as taking on elderly dependents may be another reason to re-evaluate withholdings. If too little has been withheld in the past and tax payments have been due in April, individuals can also adjust their earnings and withholdings on their W-4s to help reduce the tax amount due in the spring.²¹

To review or update a W-4, contact the Human Resources Department in your place(s) of employment. Updating a W-4 before the start of the new year will help ensure that your changes are recorded and calculated correctly in 2025.

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The information provided by Nottingham and Associates on nacpas.com is for general information purposes only. The accounting information is provided for general purposes only and is not a substitute for professional advice. Accordingly, before taking any actions based upon such information, we encourage you to consult with the appropriate professionals about your situation. The use or reliance of any information contained in this article or on our site is solely at your own risk. Under no circumstances shall Nottingham and Associates have any liability for any loss or damage of any kind incurred as a result of the use of this site or any information provided on the site.

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