Tax strategies after Dec 31: what can and can’t be done to lower your 2025 tax bill.
Below are five tax strategies after Dec 31 we get asked about every season.
Q: Can I still contribute to my SEP IRA or Solo 401(k) for Tax Year 2025?
A: The SEP IRA is extremely flexible; you can retroactively fund it for 2025 until April 15 (or even longer if you extend). For a Solo 401(k), there are a few more restrictions and limits on contributions after Dec 31 (especially if you have an S-Corp), so it may be best to ask your accountant.
Q: Can I still do a “backdoor Roth” for Tax Year 2025?
A: A backdoor Roth is a non-deductible traditional IRA contribution followed by a Roth conversion. Yes, as a high earner you can still make your $7,000 (or $8,000 if age 50+) non-deductible IRA contribution for tax year 2025 until April 15, and then convert to Roth. No extensions allowed. Note: A backdoor Roth does not lower your current taxes, but it allows for future tax-free growth.
Q: Can I retroactively make myself an S-Corp for Tax Year 2025?
A: It’s possible, but it can be very difficult and expensive at this point because running payroll retroactively (and late) for 2025 would likely need to be done manually by an experienced accountant. There may also be penalties for late W-2s, 941s, etc. Lastly, if the IRS does not approve your late S-Corp election for last year, all this manual work would then need to be unraveled.
Q: I did not track my business mileage for 2025. Can I still deduct my car?
A: The IRS requires a “contemporaneous” log of your business miles (created at or near the time the driving occurred, not after the fact). You may still be able to reconstruct your miles for 2025 if you have clear, established evidence (like calendar appointments), but it is easier for the IRS to disallow it.
Q: Can I still make HSA or FSA contributions for last year?
A: HSA contributions for 2025 can be made until the tax filing deadline (April 15, no extensions allowed), but FSAs are use it or lose it by Dec 31 unless the plan allows a carryover or a grace period.
Act now where you can, and plan ahead for 2026 (with your accountant) for everything else.
-The Soundboard Team
The information shared in this article is provided for general educational purposes and should not be considered personalized tax, legal, or financial advice. Please consult a qualified professional before making decisions based on your unique circumstances.
