6 Tax Decisions People Regret Making Too Late in the Year
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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For many people, tax regrets don’t come from doing something wrong. It comes from waiting too long to take action.
Financial and tax experts said some of the most common year-end regrets stem from treating taxes as a once-a-year chore rather than an ongoing part of everyday financial decisions.
1. Waiting Too Long To Treat Taxes as a Year-Round Strategy
Many people still think of taxes as something to deal with only when it’s time to file. However, “Without real-time projections, they don’t see how early income decisions, investment moves and business planning quietly shape their tax bill long before filing season ever begins,” said Christopher Stroup, a CFP and owner of Silicon Beach Financial.
This can be especially problematic for people who are self-employed and don’t have taxes automatically withheld from a paycheck, said Stephen A. Weisberg, the principal attorney and founder at The W Tax Group. “That makes it convenient to forget but the responsibility hasn’t gone away. Instead, the onus is on them.”
2. Missing Time-Sensitive Decisions
Some of the biggest tax regrets involve income and retirement choices that can’t be undone once the year rolls over, Stroup said. These include “delaying retirement contributions, missing Roth conversion windows, failing to harvest losses during market volatility and postponing business expense planning.”
Once the calendar turns, those decisions become historical facts instead of planning opportunities, he added.
Hector Castaneda, a CPA and principal at Castaneda CPA & Associates, PS, said starting earlier gives taxpayers more flexibility later.
“Coordinating employer plans, defined benefit options, traditional versus Roth tax decisions and contribution timing allows taxpayers to get ahead of last-minute scrambling,” Castaneda said.
3. Underestimating Quarterly Payments
For self-employed workers and business owners, procrastination often shows up in missed estimated tax payments. “Clients wait until the filing deadline and then realize they owe more than they thought and can afford, which leads to IRS collections, penalties and interest,” Weisberg said.
He stressed how important it is to make these payments on time to avoid penalties. “When you’re self-employed, you need to pay quarterly estimated payments of the lesser of 90% of the current year’s tax or 100% of the prior year’s tax.”
4. Letting Business and Investment Planning Slip
When it comes to taxes, timing can matter just as much as the deductions themselves, Castaneda said.
“Paying out year-end bonuses, qualified plan deferrals, leveraging project billing and holding off on installment income can materially change a taxpayer’s outcome,” he said.
Stroup said failing to coordinate investments with taxes is one of the most common mistakes that compounds over time. Ignoring cost basis planning, skipping Roth strategies or mismanaging business deductions may seem minor in any given year, but those decisions “erode after-tax wealth far more than most people expect,” he added.
5. Being Caught Off Guard by Life Changes
Major life events such as job changes, business launches, liquidity events, marriage, divorce, inheritance and relocation can also create tax consequences that linger for years if they aren’t addressed promptly, Stroup said.
Waiting until the tax filing deadline to revisit tax planning around these changes often means it’s already too late to make meaningful adjustments.
6. Procrastinating Any Tax Planning
By the time returns are prepared, professionals say procrastination is usually obvious — and expensive.
“It shows up as surprise balances due, missed deductions, rushed documentation and limited options for damage control,” Stroup said. “Instead of proactive strategy, people end up reacting to numbers they no longer have the ability to meaningfully change.”
The One Tax Decision To Make Earlier Next Year
If taxpayers could change just one habit, experts agreed that starting earlier is key.
“They should commit to building a proactive tax plan in the first quarter,” Stroup said. “Early projections create clarity.”
Weisberg also recommended automating as much as possible and setting aside money for estimated quarterly taxes so payments don’t become a last-minute scramble.
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