End-of-the-Year Income Tax Checklist

What to consider now and some lesser-known tips for last-minute tax savings

Your upcoming tax return may not be all that you think it is—especially if you think you'll end up with a huge tax bill. In fact, there may be things you can do to improve your tax situation. It's always a good idea to take time to do some last-minute strategizing before the tax year runs out. Check yourself on these six key items and you'll be better prepared to handle the tax-filing season. Our strategies for last-minute tax savings could save you money. Keep in mind that you can use these tips any time of the year so you don't just have to consider them at the end of the year.

Key Takeaways

  • Know your filing status and what that means for your eligibility for tax credits.
  • Be sure you've maximized your tax savings on retirement planning.
  • Try to squeeze some planned future medical expenses into the current year to maximize your tax savings if your medical expenses for the current year border on the minimum threshold of 7.5% of your adjusted gross income.
  • Scheduling certain expenses for the higher-tax–bracket year is a wise tax-planning strategy if you anticipate a change in income tax brackets.
  • A tax planning professional can help you minimize its effect if you believe you may be subject to the Alternative Minimum Tax.

1. Know Your Filing Status

There are several ways to file your taxes. Depending on your marital status and dependent situation, you can file as one of the following:

Each of these comes with different tax bracket income thresholds, standard deductions, and eligibility for certain tax credits.

2. Review Retirement Contributions and Distributions

Pay attention to your annual contribution limits for employer-sponsored retirement accounts such as 401(k)s and 403(b)s. For most employees, the limit is $20,500 for 2022 ($22,500 for 2023). There is a special allowance for an additional $6,500 catch-up contribution for employees over the age of 50. You may also be eligible to deduct contributions to a traditional IRA if you meet certain conditions.

Be sure you take the required minimum distributions (RMDs) from your retirement account if you reach the required age. You will be required to start withdrawing on April 1 the year after you turn 73. The rules are in effect as of Jan. 1, 2023, according to the SECURE Act 2.0. If you turned 72 between Jan. 1, 2020, and Dec. 31, 2022, you must take RMDs beginning April 1 the year after you turn that age.


The age individuals were required to take required minimum distributions before the SECURE Act was passed in 2019.

3. Decide: Itemized or Standard Deduction?

It's beneficial to add up your potential itemized deductions before the end of the year to plan whether you might itemize or take the standard deduction. If your itemized deductions exceed the standard deduction for your tax status, you should itemize expenses on your tax return.

Here's the standard deduction amount:

  • Single: $12,950 for 2022 ($13,850 for 2023)
  • Head of Household: $19,400 for 2022 ($20,800 for 2023)
  • Married Filing Separately: $12,950 for 2022 ($13,850 for 2023)
  • Married Filing Jointly: $25,900 for 2022 ($27,700 for 2023)

If you plan to itemize your deductions, you will need to collect all your backup documents for your eligible expenses incurred throughout the tax year. 

4. Bunch Medical Expenses in One Year

You may want to bunch medical expenses into the current year before December 31 if you plan to itemize. Itemized expenses are only deductible to the extent they exceed 7.5% of your adjusted gross income (AGI) for medical and dental expenses. If your AGI is $50,000 and you have $7,000 in qualified expenses, you don't get to deduct $7,000 from your taxable income. Instead, you can only deduct the expenses that exceed 7.5% of your income. Since 7.5% of $50,000 is $3,750, you can deduct $7,000 - $3,750, or $3,250.

It's better to claim something than to miss out on this deduction entirely. So, November-December is a good time to look at your actual medical expenses for the current year and your anticipated medical expenses for the upcoming year.

If you're close to crossing the 7.5% threshold for the current tax year, move your purchases of eyeglasses, dentist and doctor visits, surgical procedures, and other medical and dental expenses to December to gain a tax deduction, advises Scott M. Estill, author of the book Tax This! An Insider's Guide To Standing Up To The IRS and a former senior trial attorney for the Internal Revenue Service (IRS). Likewise, if you have few medical and dental expenses for the current tax year, defer what you can until the next one.

Numerous voluntary medical costs are tax-deductible, including LASIK eye surgery, doctor-prescribed weight-loss programs, smoking-cessation programs (but not patches or gum), and capital expenses for ramps, railings, and other features installed in a home to accommodate disabilities.

You can also deduct mileage accrued driving to and from doctors, hospitals, and the pharmacy. For 2022, the standard rate for medical mileage is $0.18 per mile. The rate increases to $0.22 for 2023.

5. Consider Next Year's Tax Brackets

Before bunching expenses together, taxpayers should consider their overall tax brackets for this tax year and next year, Estill says.

"For instance, if I know my income will go up next year and thus I will be in a higher tax bracket, it may make sense to wait until next year to take the deduction because it will be worth more to me as a percentage of my income," he says.

If you will be in the 12% bracket in 2022 but might be in the 22% bracket in 2023, your deductions will be worth more in 2023. A major tax bracket change might apply if you were, say, unemployed for a chunk of 2022 but then started a new job, among other possible scenarios.

"Likewise, if my income is expected to go down next year, it may make sense to try to accelerate the purchases into the current tax year," Estill adds. This could happen if you know, for example, that you're going to retire next year.

6. Beware the Alternative Minimum Tax

The common advice to shift expenses, such as prepayment of property or state taxes, from January to December to get the tax deduction a year earlier can backfire if you end up being subject to the alternative minimum tax (AMT). But what is this tax?

According to the IRS, "Under the tax law, certain tax benefits can significantly reduce a taxpayer's regular tax amount. The alternative minimum tax (AMT) applies to taxpayers with high economic income by setting a limit on those benefits. It helps to ensure that those taxpayers pay at least a minimum amount of tax."

Determining if the AMT applies to you is tricky and may require professional tax assistance. If it does, you'll need to rethink your tax minimization strategy. "If you are subject to AMT, the benefit of being able to deduct property taxes disappears. It may be more advantageous to wait until next year to make the payment. Make sure you consult with a tax professional before you assume prepayment will result in income tax savings," says Estill.

The same is true of state income taxes for the fourth quarter of the current tax year that you might elect to pay in December instead of January, he adds.

When Should I Start Tax Planning?

Rather than scrambling to reduce your taxes in December, a better strategy is to consult with a tax professional to develop an ongoing plan that you can implement over the course of the entire year. You can change it along the way if your income or expenses don't meet your predictions.

How Many Tax Brackets Are There?

There are currently seven federal tax brackets in the United States. Tax rates range from 10% to 37%.

When Is the Required Minimum Distribution Deadline?

If you are newly 73 in 2023, your first required minimum distribution will be due by April 1, 2024, and the second by Dec. 31, 2024. The later April 1 deadline only applies to RMDs in your first year. For all subsequent years, your RMD must be taken by December 31. The old rules (under the SECURE Act) continue to apply if you were 72 on or before Dec. 31, 2022. This means your first RMD must be taken the following April 1.

The Bottom Line

Ideally, you shouldn’t wait until the end of the year to consider ways to minimize your tax bill. For example, leaving tax planning to the last minute can result in overlooked deductions. If you haven’t already, consider the strategies and tips in our checklist. Implementing the ones that apply to your tax situation could result in tax savings.

Article Sources
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  2. Internal Revenue Service. “2022 Limitations Adjusted as Provided in Section 415(d), etc.”

  3. Congress.gov. "H. R. 2617," Page 831.

  4. Internal Revenue Service. "Retirement Topics - Required Minimum Distributions (RMDs)."

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  6. Internal Revenue Service. "Topic No. 502 Medical and Dental Expenses."

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