Another Year, Another Tax Season: Your 2025 Success Guide

As you and your family fully settle into 2025, now is the perfect time to review important financial matters that will set you up for a successful year. Below are key areas on which to focus, to avoid surprises during this tax season and beyond.

1. Review your tax withholding & pay stub

Ensure your withholdings align with your tax picture, particularly if you’ve experienced a change in income or tax filing status. Consult your accountant for accuracy.

Review your retirement contributions. Here are the limits for 2025:

• 401(k)/403(b) limits: $23,500 (up from $23,000 in 2024).
• Catch-up contributions for those 50+: $7,500.
• New in 2025: a higher catch-up contribution limit of $11,250 applies to employees ages 60-63 for plans that have adopted this provision from the SECURE Act 2.0. Please consult your employer or human resource representative to see if this is available to you.

2. Gather & organize your tax documents

Designate a secure location for tax-related documents, including:

• W-2s, 1099s, and K-1s.
• Business tax filings (Forms 1120-S, 1065, etc.).
• Documentation supporting itemized deductions such as charitable receipts, medical expenses, real estate taxes, or mortgage interest.

Coordinate with your accountant to determine the best means of sending information. Accountants often use secure portals or file sharing services. Please avoid emailing documents that contain social security numbers, account numbers, or other personal information.

Avoid last-minute stress—give your tax preparer ample time to ensure the best results. Thoughtful, well-prepared tax filings lead to better outcomes. Whenever possible, submit your documents as early as you can.

3. Plan your gifting & charitable contributions

Annual gift exclusion: increased to $19,000 per person / $38,000 per couple.

Lifetime gift & estate tax exemption: increased to $13,990,000 per person. For those that intend to maximize their lifetime gifting, this is a good time to top up gifts to irrevocable trusts such as Spousal Lifetime Access Trusts (SLATs). While legislation could be passed this year to extend the current exemption amount, it is currently written into law that the exemption will be cut in half as of January 1, 2026. Please contact our office to discuss your gifting strategy to ensure you are optimizing your potential.

Qualified charitable distributions (QCDs): the maximum annual amount is $108,000 per person. We encourage completing QCDs as early in the year as possible. This allows for proper processing and time for the checks to be cashed by the receiving charities.

4. Life changes and considerations in 2025

Life evolves, and your financial plan should too. If you haven’t already, please update us on any major changes that might be in motion now or in the near future, such as:

• A move or real estate purchase: impact on taxes, liquidity, and estate planning.
• A new child or grandchild: college savings, trusts, and estate document updates.
• A job change or retirement consideration: impact on income, benefits, and investment strategy.
• Supporting aging parents: long-term care planning and financial assistance options.
• Selling a business or highly appreciated asset: tax planning, tax loss harvesting, and charitable giving strategies.
• Estate plan updates: reviewing wills, trusts, and beneficiaries to ensure they align with your wishes. Preparing for the possibility of a decrease in the lifetime exemption amount.

As always, we are here to help. Please reach out with any questions or updates—we look forward to working with you in the year ahead.

Your Bridgewater Advisors Team

Disclosures:
– This is not a solicitation, or an offer to buy or sell any security or investment product, nor does it consider individual investment objectives or financial situations.
– Information in this material is not intended to constitute legal, tax or investment advice. You should consult your legal, tax and financial advisors before making any financial decisions.
– IRS Circular 230 Disclosure: Pursuant to IRS Regulations, neither the information, nor any advice contained in this communication (including any attachments) is intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.