INCOME TAX PLANNING

• Harvest capital losses to offset any realized gains or rebalance taxable investment accounts.
• Consider harvesting any capital gains that can be realized in the 0% tax bracket.
• Review charitable contributions to maximize income tax deductions.
  • Consider donation of appreciated assets that have been held for more than one year, rather than cash.
  • Opening and funding a Donor Advised Fund (DAF) as it allows for a tax-deductible gift in the current year and also the client’s ability to dole out those funds to charities over multiple years.
  • Qualified Charitable Distributions (QCDs) are another option for those over 70.5 and especially for those who don’t typically itemize on their tax returns.
• Weigh the benefits of converting Traditional IRA to a Roth IRA to lock in lower tax rates on some pre-tax retirement accounts.
  • Remember that Roth Conversions can no longer be recharacterized so there’s no reversing once executed.
  • Keep in mind that Roth conversions will be more beneficial when the tax can be paid by funds outside of the IRA.
• Remember that all IRA balances are included in the tax calculation of the conversion
• Maximize contributions to a retirement plan, SEP IRA (self-employed) and Health Savings Accounts.
• If age 72 or older or are a beneficiary of an applicable inherited IRA, take the required distributions before 12/31.
• If income is expected to increase in the future, consider making Roth 401(k) contributions.
• Review income tax withholding on retirement account distributions or wages and recommend any
• Review the timing of income and deductions such as payments for tuition.

ESTATE & GIFT PLANNING

• ake use of annual exclusion gifts.
• Capitalize on the unlimited gift exemption for direct payment of tuition and medical expenses.
• Consider gifting to a 529 plan by year-end if saving for a child's or grandchild's education.
  • Many states offer tax deductions for residents contributing to their state programs.
  • Consider gifting up to 5 years of the annual exclusion amount to an individual’s 529 plan and filing a gift tax return, electing to treat it as if it were made evenly over a 5-year period.
• Confirm wills, trusts, and power of attorneys are up-to-date and consistent with current plans.
• Review lifetime gift and GST gifting opportunities to use additional applicable exclusion and exemption amounts

RETIREMENT, INVESTMENTS AND OTHER PLANNING

• Are there any major life changes such as marriages or divorces, births or deaths in the family, job or employment changes, changes in residency, and significant planned expenditures (real estate purchases, college tuition payments, etc.)?
• Are pre-tax and Roth contribution amounts to retirement accounts for the new year updated and accurate?
• Review various insurance policies and confirm whether the amount of coverage and deductibles are still adequate.
• Review beneficiary designations and update, as necessary.
• Confirm that Flexible Spending Account balances have been spent or there is a plan to spend the entire balance and set next year’s contribution amounts.
• Review the investment portfolio and target asset allocation. Confirm whether the allocation is within the targeted ranges for each asset class as recent market performance could have caused allocations to drift dramatically.
• Review any scheduled 4th quarter estimated tax payment needs and assess any liquidity for payments.
• Consider an additional tax payment or increase in tax withholdings to eliminate a penalty or changes in a tax situation for the year.
• Evaluate progress towards financial goals and review goals for the year and any changes in long term goals.
• Plan for the unique change for IRA and 401(k) required minimum distributions for the upcoming year and beyond. With the change in the lifetime expectancy factors, required minimum distributions (RMDs) amounts could be somewhat smaller than prior years.

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As the year draws to a close, now is the time to take a closer look at your current tax strategies to make sure they are still meeting your needs and take any last-minute steps that could save you money.

The One Big Beautiful Bill Act that was passed in the summer brings many changes. Please refer to my email from 7/25 for details of the provisions. Here are some key individual tax provisions:

• Beginning in 2026, non-itemizers can deduct up to $1,000 (or $2,000 for married taxpayers filing jointly) for certain charitable contributions made during the tax year.
• Also beginning in 2026, there is a new limit on charitable donation deductions for taxpayers who itemize deductions on Schedule A, reducing these by 0.5% of the taxpayer’s MAGI. So, a taxpayer with $200,000 of MAGI would receive no deduction for the first $1,000 of charitable donations. To avoid this limit next year, consider accelerating charitable deductions into 2025.
• The deduction limit for state and local taxes (SALT) has been temporarily increased from $10,000 to $40,000 for taxpayers with modified adjusted gross income (MAGI) up to $500,000. This higher SALT cap is effective for tax year 2025 and expires at the end of 2029.
• Personal exemption, miscellaneous itemized deductions, and deduction for moving expenses are permanently eliminated.
• A new $6,000 deduction per person has been introduced for seniors who are 65 years of age and over, in addition to the standard deduction and additional standard deduction for seniors. This deduction phases out once MAGI reaches $75,000 for single taxpayers or $150,0000 for married taxpayers filing jointly. It is available for tax years 2025–2028.
• Taxpayers may now deduct up to $10,000 for interest paid on the purchase of a qualified new passenger vehicle for personal use. The deduction phases out once MAGI exceeds $100,000, or $200,00 for married taxpayers filing jointly.
• Gift and estate tax exemption amounts are made permanent and increased. The lifetime gift and estate tax exemption, which will be $13.99 million in 2025 (or $27.98 million for couples filing jointly) and $15 million in 2026 (or $30 million for married couples filing jointly). The exemption will be adjusted annually for inflation going forward.

The Washington State long term capital gains tax regime now has a progressive rate structure, setting a 7% rate for gains up to $1 million and 9.9% for those exceeding a fling threshold. The 2025 filing threshold amount is $278,000.

Here are some tax planning strategies that can help minimize the WA state capital gains tax bill.

• Spread the sale of your assets over several years to stay below the WA filing threshold
• Harvest long term losses to offset long term gains
• Sell an investment on installment sale so the gain can be recognized over the term of the note
• If moving to another state, consider waiting to sell; but also consider the state tax implication of the new state
• If there is net capital loss, consider harvest enough long term gains from highly appreciated shares to offset the capital losses. Buy back the shares if you like them, and the new shares will have high basis.

Here are some additional year-end planning ideas and some checklist items:

• Don’t forget to take your RMD (required minimum distributions) before year end. To avoid penalties (they are significant) for missed RMD, we recommend signing up for auto RMD payment with your financial institutions.
• Withholdings - the IRS requires prepayment of 110% of your 2024 taxes or 90% of your 2025 taxes via payroll withholding or quarterly payments. Now is a great time to look at your projected tax. Doing this will help avoid unwanted penalties/interest (interest is 7% for 2025) as well as helping you plan for cash flow needs. Adjust your withholding if needed before the end of the year.
• You can make a salary deferral to a retirement plan to reduce taxable income. Make sure your total salary deferral contributions do not exceed $23,500 ($31,000 if over 50) for 2025. Goes up to $24,500 ($32,500 if over 50) in 2026. There is also a special “super catchup” of $11,250 in 2026 for ages 60-63. Consult your 401k plan administrator. If you switched jobs, make sure the total of your contribution from all jobs does not exceed the limit. Those 401ks offering after-tax contributions and in-service distributions may want to consider a back-door Roth to “superfund” your Roth account.
• If your retirement portfolio is depressed, or you are in a low tax bracket this year, you might want to consider the Roth IRA conversion strategy. Please keep in mind the conversion is a taxable event, so careful planning is needed. Conversions must be completed by 12/31 to be effective for this year.
• Qualified business income deduction - If you own a business or a rental property, you may qualify for this deduction (a potential 20% deduction on business profit). The deduction can be limited by taxable income, which means that planning to minimize income can be important.
• If you have investments with an unrealized loss, consider whether you should realize those losses by selling the investments before the end of the year, especially if you have capital gains to offset. If you like the stock and want to buy it back, be aware of the wash sale rules, which are 30 days before and after the sale.
• To the extent you can control the timing of your medical expenses, group them into the same tax year so they may exceed the yearly threshold to deduct them. The threshold is 7.5% of your adjusted gross income.
• If you are thinking about making gifts to charities, consider appreciated securities. With the increase in standard deduction, if you are borderline with the standard deduction vs. itemized, you may want to consider “bunching” your donations in certain years, so that in a year of high donation, you take the higher itemized deduction; in a year of low donation, you take the standard deduction. If you are unsure which charities to give yet, or won’t be itemizing next year, but want the tax deduction this year, consider a donor advised fund (DAF).
• Consider 529 plans to fund education. You can “superfund” it by front-loading 5 years of contributions with gift tax exclusion, so it will be gift tax free (a gift tax return is still required).
• Make your charitable donation via RMD if you are required to take RMD, the limit is $108,000 for 2025.
• If you paid household employees $2,800 or more, the payroll tax filings are due by 1/31/2026.
• The annual gift exclusion amount for 2025 and 2026 is $19,000 per person.
• Now is a good time to review whether any updates are needed to your insurance policies or beneficiary designations.

If you are interested in scheduling a call to discuss year end planning moves, please contact us. For more tax planning tips and recent tax updates, please visit our website at www.bolsoncpa.com .

Getting Ready for Taxes

We want to make tax filings easy for you. We have developed the schedule below for you to use so the return preparation process can be efficient and effective.

January 2026	You should have received our engagement letters. Organizers are uploaded to your portal for you to access. Please use the tax organizers to minimize errors caused by omitted data. If you have received paper organizers in the past, they will be in the mail the 2nd – 3rd week.
February 1 - March 1, 2026	You may upload your tax data. If mailing, be sure to retain copies in case of misdirected mail. We recommend using our secure portal to upload your data. If you have to email, please password protect sensitive documents.
March 1, 2026	We must have the bulk of your tax data in order to prepare your tax return for filing by April 15, 2026.
April 1, 2026	We need your final open items, such as missing K-1s, to complete your return by April 15, 2026. This is also the deadline for you to provide us data if you want us to calculate extension payment(s).
April 15, 2026	Taxes must be paid, and returns or extensions filed; first 2026 estimated tax payment is due.
June 15, 2026	Your second 2026 estimated tax payment is due.
September 15, 2026	Your third 2026 estimated tax payment is due; if you are on extension, we need every last bit of your tax data!
October 15, 2026	Extended tax returns are due.

We do our best to work on tax returns whenever we receive your data, but we may not be able to complete returns by IRS deadlines when the data is submitted late. The turnaround for tax data received from late February on is typically about 4-5 weeks, please plan ahead.

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