2025 Tax Return Process and Logistics

How to get us data - Portal, e-mail, US Mail, In Person??

• Our preferred method of exchanging information continues to be the client portal. It is the fastest and most secure means to get us documents.
• There is no problem if you want to use one of the other methods. However, if mailing us documents, we will remind you there are increased risks of documents being lost or stolen so use this method at your own risk.
• If mailing us documents or dropping them off, please do NOT provide us with any original documents. Either make copies or provide us electronic versions as it is your responsibility to keep all original documents.

2025 Organizers

• We will provider organizers again this year. As always, it is not mandatory to use these but they provide a good tool to jog your memory on documents or tax related items we need.
• Given the changes required by the new tax legislation (HR-1), the organizers will likely not be available until January at the earliest. As soon as they are available, you will be notified.
• We will put the organizers into the portal. For those that have requested them to be mailed in the past (or want them mailed this year), we will do so.

Year End Tax Strategies

IRA and 401K Contributions (including catch-up contributions)

IRA's

• For those eligible, you can make qualifying IRA contributions up to the date you file your 2025 return (including extensions).
• You can contribute up to $7,000 for 2025 and, if over 50, an additional $1,000 catch-up contribution.

401k's

• If not done so already, consider maximizing your contributions to your employer sponsored 401k plans. You can contribute up to $23,500 and, if over 50, an additional $7,500 for a total of $31,000.
• As a result of HR-1, if you are between 60 and 63 in 2025, your catch up contribution limit increases to $11,250 for a total of $34,750.
• All 401k contributions must be made by December 31st.
• If your employer does a match, we always suggest you contribute at least enough to take full advantage of the employer match as that is essentially free money.

Roth Conversions ("Fill the Bracket" strategy)

• If you are in a favorable tax bracket in 2025 and anticipate you will be in higher tax brackets in future years, you may want to consider making Roth conversions to "fill up" the bracket you are in. This will optimize your income taxed at the lower rate and allow your money to grow tax free from that point forward.
• Unlike IRA contributions noted above, Roth conversions must be made no later than December 31st (but check with your fiduciary in case they have earlier cutoffs for processing time).

Charitable Contributions

• Qualifying charitable contributions (cash and non-cash) must be made by December 31st.
• HR-1 introduces some new treatments for charitable contributions in 2026 that may create some opportunities in 2025 and beyond.
• If you itemize, starting in 2026 there is a .5% AGI floor that you must exceed before charitable contributions count toward your total itemized deductions (this treatment is essentially similar to the 7.5% floor on medical expenses).
• If you do not itemize, starting in 2026 you can still deduct up to $1,000 ($2,000 if married) "above the line" as a reduction in taxable income for qualifying charitable contributions made.
• As a result of these changes coming in 2026, you may want to increase contributions in 2025 to avoid the .5% AGI floor (if itemizing).
• On the other hand, if you don't itemize you may want to defer any contributions to 2026 to take advantage of the $1,000 ($2,000 if married) deduction available to non-itemizers.

Tax Loss Harvesting

• If you are anticipating net capital gains in 2025 (from sale of stocks, bonds and digital currency or the sale of a residence/business), work with your financial advisor to sell ("harvest") poor performing investments before year end. By doing so, those losses help offset the taxable gains. Here are a few things to be aware of:
• Due to wash sale rules, you cannot repurchase substantially similar securities within 30 days. If you do so, the loss is not allowed as a deduction.
• Keep in mind that if your losses exceed the gains such that you have net capital losses for the year, you are limited to a maximum $3,000 loss deduction in the current year (and the unused losses carryover to future years).
• On the other hand, if you have large capital loss carryovers from prior years, you may want to consider selling stocks with large, unrealized gains up to the point of the loss carryover. This locks in those gains and essentially makes them tax free.

SALT and other HR-1 Opportunities

• If you itemize, HR-1 increased the limit on SALT (state and local taxes) from the prior $10,000 limit to a new $40,000 limit.
• There are income limitations on this new limit - if your AGI is over $500,000, the $40,000 SALT limit is reduced in phases but never goes below the prior $10,000 limit.
• All other things being equal, this SALT increase could reduce your taxable income up to $30,000. You can either take advantage of that reduction to lower your taxes or use that room to pull additional income (Roth conversions for example) into the current year if you are in a favorable tax bracket.
• For those that will benefit from the new HR-1 deductions for overtime income, tip income, car loan interest or the senior deduction (see our prior newsletters for details on these), this will potentially create the same opportunity. You can either take advantage of the lower taxes these create or use these new deductions to pull more income into 2025 if you are in a favorable tax bracket.

Odds and Ends...

Manual Checks

• Although delayed by the government shutdown, the government is moving forward with efforts to eliminate manuals checks. This is both for payments the government makes (IRS refunds, social security, etc.) as well as payments made to them (tax payments primarily) and will be phased in over time.
• If not done so already, become familiar with using the on-line payment links for the IRS (both for taxes owed with the return as well as estimated payments if making them).
• For your convenience, we have added the links to pay the IRS or CO in our website under the Client Info tab.

Joint Return payments

• We saw an increase in misapplied payments by the IRS and CO this year for married couples filing joint returns. Many of these were due to the fact the payments were made using the spouse's social number, not the primary taxpayer's social security number.
• To avoid the risk of misapplied or held payments, always make tax payments using the primary taxpayer's social security number.

Q4 Estimated Payments

• A quick reminder for those making quarterly estimated payments - the Q4 payments are due no later than January 15, 2026.

Staff Changes

• We are excited for Amie Gardner who has decided to move to FL for personal reasons. She will continue to be a valuable part of our team and work remotely as well as come back to CO as needed.
• Kristen Neilson has joined our team as our full time receptionist - welcome aboard Kristen!
• Unfortunately, Dani Collins has moved on to pursue other opportunities. Any work previously done by Dani is being reassigned to other team members and you will be notified if these changes impact you.