As the calendar year draws to a close, it's crucial to look into strategic tax planning to maximize your benefits and minimize liabilities. While some actions can be taken into the next year, others must be accomplished by December 31. Here we highlight key tax-saving tactics that have a strict year-end deadline.

1. Maximize Retirement Contributions

One of the most effective methods to lower your taxable income and prepare for the future is to maximize contributions to your retirement accounts such as 401(k) or 403(b). Ensure these are maximized by December 31, as most contributions must be made within the tax year. This strategy not only reduces taxable income but also enhances your retirement savings.

2. Make Charitable Donations

If you itemize deductions, consider making charitable contributions by December 31. This could be in the form of cash, property, or appreciated securities. Document your donations well, as these can provide a significant deduction, lowering your taxable income.

3. Execute Tax Loss Harvesting

If your investment portfolio has underperforming stocks, consider selling them to realize a loss. These losses can offset gains and reduce your taxable income, but this strategy must be completed before year-end. Ensure that you avoid 'wash sales' by not repurchasing the same asset within 30 days, to secure your tax benefits.

4. Review Your Flexible Spending Accounts

Many Flexible Spending Accounts (FSAs) have a 'use it or lose it' policy requiring you to spend the funds by the end of the year. Check your FSA terms and make necessary purchases such as prescription glasses or medical supplies to avoid forfeiting your money.

While these strategies need to be addressed before the year ends, proactive planning and execution can yield significant tax benefits. Consulting with a tax professional can provide personalized advice tailored to your financial circumstances.