The Right Order for Year-End Planning
Why a tax projection comes before Roth conversions, loss harvesting, and charitable gifts, and which items can wait until January.
The short answer. Year-end decisions are connected, so the order matters more than the date. Start with a tax projection, because every other decision depends on it. Make income decisions next, such as Roth conversions and tax-loss harvesting. Choose how to give after that, since the best way to give depends on where your income lands. Leave time to finish anything that moves between institutions, and save items with April deadlines for January.
A Checklist Isn’t a Plan
Most year-end checklists treat each item as separate. They aren’t. How much you can convert to a Roth depends on the capital gains you’ve already realized. Whether to harvest a capital loss depends on the gains you’re carrying. The optimal way to give depends on your income for the year. Make these decisions out of order, and each one is made without information the others provide.
The timing is different for every family. Someone who sold a business in the spring may have needed this analysis months ago. Someone else may need only a quick check in November. The sequence stays the same.
Start With a Tax Projection
A projection estimates your full-year tax picture from what has happened so far and what’s still ahead: wages and withholding, gains and losses realized to date, distributions already taken, business income, equity compensation vesting before December 31, and mutual fund capital gain distributions, which often arrive in December.
The result answers one question: how much more income can you recognize this year before crossing a threshold that matters? Sometimes that’s the next tax bracket. Often it’s less obvious, like the 3.8% net investment income tax, which applies above $200,000 of modified adjusted gross income (AGI) for single filers and $250,000 for joint filers, or the Medicare premium surcharges known as IRMAA, which are based on your income from two years earlier.
For Kansas City families, state taxes belong in the projection too. Starting with 2025, Missouri no longer taxes capital gains for individuals, while Kansas still taxes them. Which side of State Line you live on can change the math on selling appreciated assets.
The projection is where anything unusual comes to light: a business sale, a large stock vest, a property sale, an inheritance, or a year when income ran well above or below normal.
Then Make Income Decisions
Roth conversions, realized gains, harvested losses, and the timing of business distributions or deferred compensation all draw on the room the projection measured.
Conversions deserve the most care because they’re permanent. Since 2018, a Roth conversion can no longer be undone, so the amount you convert is the amount you’ll owe tax on.
Tax loss harvesting has its own rule. The wash sale rule disallows a loss if you buy the same or a substantially identical investment within 30 days before or after the sale. If you want to stay invested, decide on the replacement at the same time you sell. For a December sale, that 30-day window runs into January.
Then Decide How to Give
Once your income picture is clear, you can choose the best way to give. That choice carries more weight this year, because new federal rules took effect in 2026:
Itemizers can deduct charitable gifts only above 0.5% of AGI. With $300,000 of AGI, the first $1,500 of gifts isn’t deductible.
For taxpayers in the top 37% bracket, the tax benefit of itemized deductions is capped at 35%.
If you take the standard deduction, you can now deduct up to $1,000 of cash gifts to public charities ($2,000 for joint filers). Gifts to donor-advised funds don’t qualify.
Qualified charitable distributions (QCDs) from an IRA, available at age 70½ and older, aren’t affected by the floor or the cap, because they’re excluded from income rather than deducted. They can also count toward your required minimum distribution.
Gifts of appreciated stock avoid capital gains tax, and a donor-advised fund lets you deduct several years of giving into one tax year. Which approach fits depends on your income, your age, and your cost basis, all of which the projection has already shown.
Leave Time to Finish
Anything that moves between institutions needs time. A gift of stock generally counts when the shares arrive in the charity’s account. A QCD paid by check has to reach the charity. And custodians set their own year-end processing cutoffs for conversions and distributions, often in mid-December rather than on December 31.
The goal is for the last weeks of the year to be about confirming that things happened, not starting them.
Know What Can Wait
Some items have deadlines after December 31, and taking them off the year-end list lowers the pressure:
IRA, Roth IRA, and HSA contributions for 2026 can be made until the April 15, 2027 filing deadline.
The final 2026 estimated tax payment is due January 15, 2027.
Estates and certain trusts can make distributions in the first 65 days of the new year and elect to treat them as made in the prior year.
Knowing which items can wait often shortens the December list to a few decisions.
The Windward Approach
Year-end planning isn’t a once-a-year event at Windward. Tax planning, investment management, and retirement income strategy are handled by one team, so we can revisit your projection whenever your situation changes, whether that’s a business sale in March or a bonus in November. Each client’s timing looks different. The order of the decisions is what stays consistent.
If you’d like help thinking through your own year, we’d welcome the conversation.
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