By Mark Sipos, Director, LFG Tax
October may seem early to think about taxes. After all, most 2026 tax returns will not be due until April 2027. But many of the most valuable tax-planning opportunities have one thing in common: they must be addressed before December 31.
Waiting until tax season can mean discovering that an opportunity has already passed. A year-end review can help you identify strategies that may reduce your current tax liability, improve future retirement income, and better coordinate your tax and investment decisions.
Here are several areas worth reviewing before the end of the year.
1. Consider Whether a Roth Conversion Makes Sense
A Roth conversion allows you to move money from a traditional IRA to a Roth IRA and pay income tax on the amount converted today. While this creates a current tax liability, it may provide significant long-term benefits because qualified Roth withdrawals can generally be tax-free.
For some retirees and high-income taxpayers, a partial Roth conversion each year can help manage future required minimum distributions (RMDs) and potentially reduce the amount of taxable retirement income later in life.
The key is determining how much to convert. Converting too little may leave future tax savings on the table, while converting too much could push income into a higher tax bracket or increase Medicare-related premiums.
2. Review Your RMD and QCD Strategy
If you are required to take an RMD from a traditional retirement account, make sure you have a plan for satisfying the requirement before year-end.
For individuals age 70½ or older who are charitably inclined, a qualified charitable distribution (QCD) may be particularly valuable. A QCD allows an eligible taxpayer to make a charitable gift directly from an IRA, subject to the applicable annual limits and requirements.
Because the distribution can potentially satisfy all or part of an RMD while being excluded from adjusted gross income, a QCD can be more tax-efficient than taking the IRA distribution personally and then writing a charitable check.
If charitable giving is an important part of your financial plan, this is an area worth discussing before December.
3. Look at Capital Gains and Losses
Investment portfolios should be reviewed from both an investment and tax perspective.
If you have significant unrealized gains, it may be worth determining whether selling certain investments before year-end fits your overall financial plan. Conversely, investments with losses may provide opportunities for tax-loss harvesting, potentially allowing losses to offset capital gains and, subject to the applicable rules, a limited amount of ordinary income.
The important point is that investment decisions should not be made solely for tax purposes. Your investment objectives, risk tolerance and long-term financial plan should remain the primary considerations.
4. Revisit Charitable Giving
Year-end charitable planning can be especially valuable for taxpayers with significant income, appreciated securities or unusually large gains.
Instead of donating cash, consider whether contributing appreciated investments may provide a more tax-efficient way to support your favorite charities. A donor-advised fund may also allow you to make a larger charitable contribution in one year while recommending grants to charities over time.
For taxpayers who make substantial charitable gifts, coordinating charitable planning with investment and tax planning can produce better results than treating each decision separately.
5. Review the Impact of State and Local Taxes
Changes to federal tax rules can make it important to revisit the deductibility of state and local taxes, particularly for taxpayers who itemize deductions.
Ohio taxpayers should also consider how federal and state tax rules interact with their individual circumstances. Property taxes, Ohio income taxes, business income and other deductions can all affect the overall picture.
A year-end tax projection can help determine whether additional deductions, income recognition or other planning opportunities make sense before December 31.
6. Don’t Forget Medicare and Retirement Income
Tax planning does not stop with the federal income-tax return.
For retirees, additional taxable income can affect Medicare premiums through the Income-Related Monthly Adjustment Amount (IRMAA). A Roth conversion, capital gain, large IRA distribution or other significant income event could potentially increase future Medicare premiums.
That makes it important to look at the entire picture—not simply this year’s tax bracket.
Start Planning Before the Calendar Turns
The best tax planning is proactive. By October, there is still time to make meaningful decisions about retirement distributions, Roth conversions, charitable gifts, investment transactions, estimated taxes and other year-end strategies.
Your 2026 tax return will tell you what happened. Tax planning gives you an opportunity to influence what happens next.
Before year-end, consider scheduling a tax-planning review with your financial and tax professionals. A coordinated review can help identify opportunities, avoid surprises and ensure that your tax decisions are aligned with your broader financial goals.
Don’t wait until April to discover what you could have done in December.
