Why Year-End Tax Planning Starts Now: A Mid-Year Guide to Staying Ahead

As we move into the second half of the year, it’s the perfect time to take a step back and assess your tax planning strategy. While most people associate tax prep with the flurry of activity that happens in January or February, the truth is that smart tax planning happens year-round—and some of the most effective moves are made long before the calendar flips to December.

If you’re looking to reduce your tax liability, optimize your financial picture, and avoid last-minute stress, now is the time to act. Here are three key strategies you can start implementing today:

1. Maximize Your Deductions

Many deductions require action before December 31st, so getting ahead now gives you the chance to make meaningful changes. Depending on your situation, you might consider:

• Charitable giving: Donations to qualified organizations are deductible if made within the tax year. A mid-year review gives you time to plan your giving more strategically.

• Health-related deductions: If you’re enrolled in a high-deductible health plan, contributing to a Health Savings Account (HSA) can reduce your taxable income.

• Business expenses: For entrepreneurs and self-employed individuals, tracking deductible expenses throughout the year is crucial to avoiding missed opportunities at tax time.
  
  
  

2. Contribute to Retirement Accounts

Retirement contributions don’t just help build your future—they can also reduce your current tax burden. If you’re still building toward your contribution limits for the year, now is a great time to revisit your:

• 401(k) or 403(b): Contributions reduce your taxable income and grow tax-deferred.

• Traditional IRA: Depending on your income, IRA contributions may be deductible.

• SEP IRA or Solo 401(k): For business owners, these options allow for substantial tax-deferred savings.
  
  
  

Waiting until the end of the year often means playing catch-up. Spreading out contributions now can make it easier to reach your goals without straining your cash flow.

3. Prepare for Potential Liabilities

Whether you experienced a bump in income, sold an asset, or made a large withdrawal, it’s important to evaluate the tax implications ahead of time. Taking action now may give you the chance to:

• Make estimated tax payments if needed to avoid penalties.

• Harvest tax losses to offset gains in a non-retirement account.

• Review your withholdings to ensure they still align with your income projections.
  
  

Meeting with your advisor or tax professional before year-end allows for thoughtful planning—rather than scrambling during the filing season.

The Bottom Line

Tax season may still feel far off, but the decisions you make now will shape your experience in the months ahead. A proactive approach can help reduce your liability, uncover missed opportunities, and create a clearer path forward.

If you’re unsure where to start, the team at Gather Wealth Investment Management is here to help. Let’s take a closer look at your current strategy and make sure it’s working just as hard as you are.