WHAT TO DO BEFORE YOU FILE YOUR TAXES IN 2026
Before the New Year hit, there were dozens of ways to potentially minimize your tax liability, but many of those opportunities came to an end on Dec. 31 for the 2025 tax-filing season.
The tools that do remain, however, shouldn’t be discredited. There are still tax-planning opportunities that revolve around retirement plan contributions, tax credits, and penalty avoidance.
Last-Minute Deductions, Credits, and Other Opportunities
Retirement Plan Contributions
The Internal Revenue Service (IRS) allows taxpayers to make deductible prior-year contributions all the way up to the tax-filing deadline. For 2025 tax returns, that deadline is April 15, 2026. (1)
For tax year 2025, the total contributions to your traditional and Roth IRAs (for those under age 50) cannot exceed $7,000. Those 50 and older can make an additional $1,000 catch-up contribution, for a total of $8,000. (1)
Roth IRAs, however, are funded with after-tax dollars, so while your contribution will not yield a current-year tax deduction, it could potentially produce a better investment return as retirement earnings can be distributed tax free. (1)
Simplified Employee Pension IRA (SEP IRA) account owners who get an extension to file may be able to delay their contribution until October. (1)
Itemized Deductions
Many taxpayers take the standard deduction, an amount which can change each year, depending on inflation. (1)
The rules for itemized deductions in 2025 changed considerably under the One Big Beautiful Bill Act (OBBBA), making it potentially more beneficial for taxpayers to itemize their expenses this year, especially those who live in states with high property taxes. (1)
To determine if you might come out ahead by itemizing, compare your eligible itemized expenses to the standard deduction for your filing status. (1)
Itemized deductions, subject to certain dollar limitations, include amounts you paid during the taxable year for the following:
> State and local income or sales taxes (SALT)
> Real property taxes
> Personal property taxes
> Mortgage interest
> Disaster losses
> Gifts to charities
> Medical and dental expenses
While the limitation on itemized deductions was eliminated for tax years 2018-2025, OBBA eliminated the limitation permanently, capping itemized deductions to 35 cents on the dollar for taxpayers in the highest (37 percent) tax bracket. That limit does not apply to taxpayers in all other tax brackets. (1)
Tax Credits
Tax deductions, which reduce the amount of your income subject to taxes, are important, but tax credits, which reduce your tax bill dollar for dollar, shouldn’t be ignored. (1)
Families with dependent children may be eligible to claim a credit of up to $2,200 per qualifying child under the Child Tax Credit, depending on your modified adjusted gross income. A non-refundable credit of $500 may be provided for certain non-child dependents, as well. (1)
If you’re paying for higher education expenses, you may be able to claim one of two tax credits: the American Opportunity Tax Credit, which provides up to $2,500 in tax credits on qualifying education expenses per eligible student, or the Lifetime Learning Credit, which provides up to $2,000 per eligible student. You cannot claim both credits for the same student in the same year. (1)
What to Avoid Before Filing
Selling an Asset Before the 1-Year Mark
Capital gains tax rates vary depending on the amount of time you've held an asset and your annual income. You may see a large difference in your tax rate if you sell an asset before the one-year mark versus after it. (2)
Neglecting Opportunities to Harvest Your Losses
While investment losses aren’t ideal, there are steps investors can take to help reduce the sting of poor-performing assets and potentially gain a tax advantage. This strategy, known as tax-loss harvesting, allows you to potentially reduce your tax burden by selling investments at a loss to offset the taxes owed on capital gains from other investments. (2)
Consider working with a financial or tax professional to ensure you are accurately tracking and reporting your capital losses each year. A qualified professional can also help ensure you don’t inadvertently trigger wash sale rules. (2)
Closing Thoughts
Navigating tax season can be a challenge. While the intricate nature of the tax code means there is opportunity for investors to capture additional savings, there is also opportunity for mistakes.
CJE Financial does not give legal tax advice, so above all, we recommend coordinating with a CPA for smarter outcomes.
Article Sources:
1) Gigante, Shelly. “4 moves to consider before filing your tax return,” Mass Mutual. January 05, 2026. Accessed January 14, 2026. https://blog.massmutual.com/planning/tax-tips-last-minute.
2) “6 common tax mistakes for investors to avoid,” Ameriprise Financial. Accessed January 15, 2026. https://www.ameriprise.com/financial-goals-priorities/taxes/common-tax-mistakes-for-investors-to-avoid.