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Year-End Tax Compliance

As 2025 winds down, tax season looms, and focusing on compliance and documentation is crucial for a smooth filing process. By prioritizing organized records, timely estimated tax payments, and awareness of tax law changes, you can avoid penalties and potentially reduce your tax burden. Here’s what you need to know to stay on track this November and December.

KEEP DETAILED RECORDS FOR DEDUCTIBLE EXPENSES

Accurate documentation is the foundation of claiming tax deductions effectively. For medical expenses, retain receipts for doctor visits and prescriptions. Business owners should maintain records of expenses like office supplies, travel costs, or equipment purchases to substantiate deductions. If you claim mileage, a detailed log with dates, destinations, and the purpose of each business trip is essential.

Consider using tools like QuickBooks or MileIQ to simplify tracking and ensure compliance with IRS requirements. Well-organized records not only support your deductions but also make the filing process more efficient.

MEET ESTIMATED TAX PAYMENT DEADLINES

For self-employed individuals, freelancers, or those with significant investment income, staying on top of estimated tax payments is critical. The fourth-quarter payment for 2025 is due January 15, 2026, and missing it could result in penalties. Review your year-to-date income and withholding to calculate the correct payment amount.

Consulting with a tax professional can help you estimate your tax liability accurately, ensuring you avoid underpayment issues when filing your return.

STAY INFORMED ON TAX LAW CHANGES

Tax laws are constantly evolving, and 2025 introduces updates through the One Big Beautiful Bill Act to deduction limits, credits, and reporting requirements that could impact your filing. Staying informed about these changes ensures you remain compliant and can take advantage of new opportunities to optimize your tax outcome.

Work with your tax professional to review your records, confirm payment schedules, and adapt to any regulatory updates. By taking these steps now, you’ll set yourself up for a stress-free and successful tax season.

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OBBBA Investor Highlights

The OBBBA creates federally managed tax-advantaged savings accounts for children born in the US from 2024 to 2028, seeded with $1,000 from the federal government. You can contribute up to $5,000 per year to your child’s account until they turn 18. The accounts are designed to help families build long-term savings for education, homeownership, or retirement.

The Qualified Small Business Stock (QSBS) gain exclusion rules are significantly enhanced to make them more accessible and impactful for early-stage investors. For QSBS acquired at original issuance after July 4, 2025, the exclusion is tiered: 50% for stock held for at least three years, 75% for stock held for four years, and 100% for stock held for five years. The per-issuer exclusion cap is expanded from $10 million to $15 million, indexed for inflation (beginning in 2027). And the corporate gross asset limitation is increased from $50 million to $75 million.

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The One Big Beautiful Bill Act (OBBBA)

As you look back on 2025 and start planning your financial strategies for 2026, here’s a brief overview of provisions in the OBBBA that you may want to consider in that planning.

PERSONAL TAXES

OBBBA retains the reduced federal income tax brackets introduced in 2017, which were scheduled to expire in 2026, and sets the 2026 standard deduction at $15,750 for single filers and $31,500 for married couples filing jointly, with inflation adjustments expected in subsequent years.

For 2025, the federal child tax credit increases to $2,200 per child. It will be indexed for inflation in 2026 and later. This credit begins phasing out for single/head of household taxpayers and married filing jointly at $200,000 and $400,000 modified adjusted gross income (MAGI). As for your estate planning, the estate tax exemption rises to $15 million for 2026 (from $13.99 million in 2025) and will be indexed for inflation in future years.

A new deduction for interest paid on auto loans could let you write off a portion of your car loan interest. The deduction has income limits and strict rules on which cars qualify. The cap on state and local tax (SALT) deductions is temporarily increased from $10,000 to $40,000 from 2025 through 2029, with the cap rising 1% annually until it reverts to the previous $10,000 limit in 2030. The expanded cap phases out for filers earning more than $500,000 (married filing jointly) or $250,000 (single).

FOR BUSINESSES

OBBBA makes permanent the 20% small business deduction for pass-through entities such as partnerships and sole proprietorships. It makes permanent the lower corporate tax structure and rates set to expire in 2025, as well as 100% bonus depreciation and full expensing for business investments.

For more specific information on how the Act may affect you, talk with your trusted tax and financial professionals.

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November 2025 Client Line Newsletter

The One Big Beautiful Bill Act (OBBBA) – here’s a brief overview of provisions in the OBBBA that you may want to consider during planning.

OBBBA Investor Highlights – the OBBBA creates federally managed tax-advantaged savings accounts for children born in the US from 2024 to 2028.

Year-End Tax Compliance – focusing on compliance and documentation is crucial for a smooth filing process.

November 2025 Client Profile

Budget Saving Tips for Holiday Travel – with smart planning you can enjoy the season without breaking the bank.

November 2025 Question and Answer

Attracting Top Talent for Your Business in 2026 – securing talent is essential for your business’s success.

Select OBBBA Provisions and Expirations at a Glance -provisions for taxes and student loans and their respective expiration dates.

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Holiday Tipping Guide: A Refresher

Tipping during the holidays is a nice way to show your appreciation to service providers for all they do for you during the year. Here are some general guidelines.

Trash Collector: $10 – $30
Parking: $10 – $50
Garage Attendant: $10 – $50
Mail Carrier: $20
Mechanic: $20
Hairstylist: Cost of One Session
Manicurist: Cost of One Session
Housekeeper: Cost of One Session
Massage Therapist: Cost of One Session
Personal Trainer: Cost of One Session
Babysitter: One-to-Two Night’s Pay
Dog Walker: One Week’s Pay
Caregiver: One Week’s to One Month’s Salary
Daycare Staff: $20 – $70 Per Person

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October 2025 Question and Answer

QUESTION:

What is tax-loss harvesting, and how is it used as a strategy by investors?

ANSWER:

Tax-loss harvesting is a strategy used by investors to reduce their taxable income by selling investments that have declined in value. By realizing losses, investors can offset capital gains from other investments, lowering their overall tax bill.

The losses can also be used to offset up to $3,000 of ordinary income annually, with any remaining losses carried forward to future years. This technique helps investors optimize after-tax returns, especially in volatile markets, by strategically managing their investment portfolios to minimize tax liabilities while maintaining their investment goals.

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Considerations for Employers

Open enrollment is an opportunity for business owners to review and communicate their benefit offerings, ensuring employees can make informed decisions. To ensure a smooth process, employers should start by reviewing plan options, costs, and compliance requirements, including updates to healthcare laws or regulations. Clear, transparent communication is essential—provide detailed plan summaries, FAQs, and enrollment guides to help employees understand their choices.

USE TECHNOLOGY

Employers should also consider leveraging technology, such as online enrollment platforms, to streamline the process and reduce administrative burdens. Offering educational sessions or webinars can increase employee engagement and understanding of their benefits. It’s important to set deadlines and send reminders to ensure timely enrollments by employers.

FEEDBACK

Collect feedback from employees post-enrollment to identify areas for improvement. As a business owner you should review your budget allocations and negotiate with providers if needed to offer competitive and comprehensive benefits. Proper planning and communication during open enrollment can enhance employee satisfaction, improve benefits utilization, and ensure compliance with legal requirements.

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Making Informed Benefit Selections

Open enrollment is a crucial time for employees to review and update their benefits for the upcoming year. To make the most of this period, it’s important to consider several key factors.

WHAT ARE YOUR NEEDS?

Evaluate your current healthcare needs—are your medical, dental, or vision plans still suitable? Review your provider networks, coverage options, and costs. Next, assess your financial situation; consider premiums, deductibles, copayments, and out-of-pocket maximums to choose plans that balance coverage with affordability.

WHAT ARE YOUR LOVED ONES NEEDS?

Examine your dependents’ needs, such as whether their coverage has changed or if new plans offer better benefits.

Don’t forget to review your retirement savings options, like 401(k) contributions, and any supplemental insurance policies available. It’s also wise to compare flexible spending accounts (FSAs) or health savings accounts (HSAs) to maximize tax benefits.

BE INFORMED

Take the time to read all plan materials carefully and ask questions if needed. Making informed decisions during open enrollment ensures you select benefits that best support your health, financial stability, and long-term goals.

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October 2025 Client Profile

Nicholas owns a small tech startup and has invested in various stocks through his personal investment account. Over the past year, his portfolio included shares of Company A, which he bought at $10,000, and Company B, purchased at $8,000. Recently, Company A’s stock has declined to $6,000, and Company B’s stock has dropped to $5,000. Nicholas decides to implement tax-loss harvesting to reduce his tax liability.

He sells his shares of Company A at a loss of $4,000 and his shares of Company B at a loss of $3,000. These realized losses can offset his $7,000 capital gains from other investments or, if he has no gains, he can use up to $3,000 of the losses to reduce his ordinary income, carrying the remaining losses forward to future years.

By doing this, Nicholas effectively lowers his taxable income, saving money on taxes. To maintain his portfolio’s desired asset allocation, he then re-invests the proceeds into similar stocks or funds, avoiding the wash-sale rule. This strategic move helps Nicholas optimize his tax situation while keeping his investment strategy on track.

Client Profile is based on a hypothetical situation. The solutions discussed may or may not be appropriate for you.

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A Time for Giving

Year-end is a time for giving, not only to family and friends but also to charity. If you’re among our readers who are passionate about philanthropy, year-end giving can offer the satisfaction of making a difference as well as significant financial advantages.

THE IMPACT

Data from the Indiana University Lilly Family School of Philanthropy shows that charitable donations typically increase during the year-end giving season. This surge is partly driven by holiday spirit and the motivation to leverage tax advantages before the calendar year ends. Many people find that giving strategically can maximize their contributions while minimizing their taxable income. Charitable contributions have a profound impact, and exploring innovative options can elevate your giving strategy.

CONSIDER A GIFT OF LIFE INSURANCE

While traditional methods of donating, such as cash or grants, are well-known, using life insurance in charitable giving is an option that’s often overlooked. One of the most innovative ways to contribute is through life insurance policies. If you have a life insurance policy that you no longer need, or if you’re looking to give a substantial gift to a charity, you can transfer ownership of the policy to a nonprofit organization. This not only delivers a significant future benefit to the charity, but it also provides you with some notable tax advantages today.

When you make a charity the owner and the beneficiary of your life insurance policy, you may be able to deduct the policy’s cash surrender value on your federal income tax return for the year you gift the policy. Further, if you continue to pay the premiums on the policy, those payments can also be deductible as contributions to charity.

NON-TAX BENEFITS

By naming a charity as the beneficiary of your life insurance, you’re effectively building a legacy. This can be particularly appealing if you’re enthusiastic about a cause and want to ensure lasting support for it beyond your lifetime. Life insurance gifts also may be simpler and more flexible insurance than other asset transfers, such as real estate or stocks, which can involve complexities associated with valuation and appreciation. You don’t have to give away your entire policy. You can choose to gift a portion of the policy or maintain partial ownership while designating a charity as the beneficiary.

FINAL THOUGHTS

As you contemplate your year-end giving strategy, remember that the essence of giving lies not just in the act of donating but in how creatively and effectively you can align your philanthropy with your financial goals. Contact your trusted advisors as they can provide additional insights tailored to your financial situation, ensuring you are making the most of your generosity.

Keeping with the trends of the past decade, 34% of all giving in 2024 occurred in the last three months of the year.

Source: 2024 Trends in Giving, Blackbaud Institute, 2025