Why year‑end planning matters
As the calendar year winds down, CPAs and taxpayers have an opportunity to make moves that could affect next year’s tax bill. The IRS reminds taxpayers that the U.S. tax system operates on a pay‑as‑you‑go basis, so checking your withholding during the year is important to avoid a surprise bill or an unnecessarily large refund. Organizing tax records as you receive them — including Forms W‑2, Forms 1099, business receipts and records of virtual currency transactions — makes preparing a return easier and can help identify deductions or credits that might otherwise be overlooked. Reducing adjusted gross income (AGI) by contributing to retirement accounts or health‑savings accounts and paying deductible expenses can lower your tax rate.
From research to recommendations: the role of AI
AI tax research tools can comb through massive amounts of tax law, regulations and court cases, flagging the provisions relevant to a client’s specific situation. Traditional research can be time consuming; AI tax research speeds the process by instantly identifying recent law changes and pairing them with client circumstances. For instance, AI can recognize that qualified charitable distributions (QCDs) from traditional IRAs allow taxpayers age 73 or older to satisfy required minimum distributions and keep the distribution out of their AGI. It then suggests strategies, like directing a QCD to the client’s favored charity, which can lower AGI and potentially reduce future Medicare premiums. Integrating AI tax planning with practice management systems also helps CPAs visualize how tax law sunset provisions — such as the scheduled expiration of many Tax Cuts and Jobs Act provisions after 2025 — might affect clients’ future tax liabilities.
How Hive Tax AI helps CPAs
Hive Tax AI is designed specifically for tax professionals, providing up‑to‑date AI tax research and AI tax planning in one platform. It continuously ingests new tax regulations and court rulings and uses natural language processing to surface relevant information quickly. Hive Tax AI’s AI assistant can analyze a client’s data, generate year‑end planning suggestions and even prepare draft memos explaining the rationale behind those suggestions. This automation frees CPAs to focus on high‑level advisory work while ensuring that planning recommendations reflect current law. Because Hive Tax AI integrates with leading tax compliance software, it streamlines workflows and reduces the risk of overlooking important planning opportunities. For CPAs seeking the best solution to enhance year‑end planning, Hive Tax AI combines authoritative research with a user‑friendly AI assistant.
Key year‑end planning considerations
Here are some year‑end considerations AI tools can help you evaluate:
- Withholding and estimated tax payments: Use AI‑powered calculators to determine whether you need to adjust W‑4 withholdings or make an estimated payment to avoid underpayment penalties.
- Recordkeeping: AI assistants can categorize transactions and store digital copies of receipts and tax documents.
- Retirement contributions: Evaluate contributions to 401(k)s, IRAs or HSAs; increasing contributions can reduce AGI.
- Charitable giving: Identify whether itemizing deductions will provide a greater benefit than claiming the standard deduction and explore strategies such as QCDs from IRAs or donor‑advised funds.
- Tax credits: Check eligibility for credits like the Earned Income Tax Credit, Child Tax Credit and education credits.
Final thoughts
Year‑end tax planning is not only about compliance; it’s a strategic opportunity to improve cash flow and avoid surprises. Leveraging AI tax research and AI tax planning through platforms like Hive Tax AI allows CPAs to deliver timely, tailored advice to clients. By combining human expertise with machine intelligence, CPAs can confidently navigate the evolving tax landscape and help clients make informed decisions before December 31.