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Mid-Year Tax Check-In: What You Should Review Before Q3

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The midpoint of the year offers a golden opportunity to evaluate your financial health, reassess your tax strategy, and make any necessary adjustments before the third quarter kicks off. Whether you're a salaried employee, small business owner, investor, or retiree, a mid-year tax check-in helps prevent surprises at filing time and ensures you’re maximizing your financial opportunities.

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Think of it as a financial tune-up: just as you wouldn’t wait until your car breaks down to check the oil, you shouldn’t wait until tax season to review your tax strategy.

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Below, we’ll walk through what to assess before Q3, including income changes, retirement contributions, deductions, credits, and estimated payments, and how to position yourself for a smoother year-end.

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1. Review Year-to-Date Income and Withholding

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One of the first steps in your mid-year tax check-in should be to evaluate how much income you’ve earned so far and how much tax has been withheld.

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For Employees

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• Pull your most recent pay stub and compare it to last year’s income. Are you earning more or less? A promotion, bonus, or new side hustle could bump you into a higher tax bracket.
  
  
• Check your W-4 elections. If you received a large refund last year or owed money, now is the time to adjust your withholding. The IRS Withholding Estimator can help you calculate the right amount.

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For Self-Employed Individuals

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• Review all revenue earned through June. Use accounting software or spreadsheets to track business income, expenses, and net profit.
  
  
• Estimate your quarterly tax obligations and make sure you’re meeting deadlines to avoid penalties.
  
  

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2. Evaluate Estimated Tax Payments

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If you’re self-employed, a freelancer, or earn significant income outside a traditional paycheck (such as rental or investment income), you likely need to make estimated quarterly payments to the IRS and state tax authorities.

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• Check your Q1 and Q2 payments. Are you on track to cover your full-year tax liability?
  
  
• If your income has increased, you may need to increase your Q3 and Q4 payments to avoid underpayment penalties.
  
  
• Conversely, if you’ve earned less than expected, you can reduce your next payments and preserve cash flow.
  
  

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💡 Tip: The third-quarter estimated tax payment is due September 15. This makes early Q3 a strategic time to recalculate and adjust.

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3. Update Life Changes That May Affect Taxes

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Major life events often come with tax implications. Before Q3 begins, reflect on any changes that occurred in the first half of the year:

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• Marriage or divorce: Changes your filing status and potentially your tax bracket.
  
  
• Birth or adoption of a child: You may now qualify for the Child Tax Credit or the Child and Dependent Care Credit.
  
  
• Home purchase: Mortgage interest and property taxes may be deductible.
  
  
• Job change or loss: This may affect your income and withholdings.
  
  
• Retirement or inheritance: May trigger income that requires planning.
  
  

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📝 Update your tax planning to reflect these events and document any relevant receipts or paperwork for deductions and credits.

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4. Maximize Retirement Contributions

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Saving for retirement isn’t just good for your future — it can significantly reduce your taxable income today.

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Traditional IRA and 401(k)

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• Contributions to a Traditional IRA or 401(k) are tax-deferred, meaning they reduce your taxable income now and grow tax-free until retirement.
  
  
• For 2025, you can contribute up to:
  
  
  
  • $23,000 to a 401(k) if you’re over 50 ($19,500 otherwise)
    
    
  • $7,000 to an IRA if you’re over 50 ($6,500 otherwise)
    
    

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Roth IRA and Roth 401(k)

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• While contributions are made with after-tax dollars, earnings grow tax-free, and withdrawals are tax-free in retirement.
  
  

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💰 Check how much you’ve contributed so far this year and consider increasing your automatic contributions to hit the annual limit by December.

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5. Check Health Savings and Flexible Spending Accounts

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Health Savings Accounts (HSAs)

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If you have a high-deductible health plan (HDHP), contributing to an HSA offers a triple tax advantage:

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• Contributions are tax-deductible
  
  
• Growth is tax-free
  
  
• Withdrawals for qualified expenses are tax-free
  
  

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The 2025 contribution limits:

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• $4,150 for individuals
  
  
• $8,300 for families
  
  
• Additional $1,000 catch-up if you’re 55+
  
  

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Flexible Spending Accounts (FSAs)

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• FSAs can be used for medical or dependent care expenses but typically operate on a “use-it-or-lose-it” basis.
  
  
• Check your FSA balance and start planning eligible purchases before the end of the year.
  
  

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6. Review Investment Activity and Capital Gains

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Mid-year is a smart time to analyze your investments and the tax impact of your trading activity.

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• Review your realized gains and losses. Have you sold stocks, ETFs, or crypto? These are subject to capital gains tax.
  
  
• Consider tax-loss harvesting, where you sell underperforming assets to offset gains.
  
  
• Evaluate dividend income and whether you’re holding assets in the most tax-efficient accounts (e.g., keeping dividend stocks in retirement accounts).

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📈 Planning ahead can help you minimize capital gains tax liability or rebalance your portfolio for long-term growth.

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7. Revisit Tax Credits and Deductions

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Tax credits and deductions can dramatically reduce your tax bill — but they’re often overlooked.

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Common Deductions to Track:

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• Mortgage interest
  
  
• Property taxes
  
  
• State income taxes paid
  
  
• Charitable donations
  
  
• Medical expenses (if exceeding 7.5% of AGI)
  
  
• Student loan interest
  
  
• Business expenses (for self-employed)

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Tax Credits Worth Considering:

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• Child Tax Credit
  
  
• Earned Income Tax Credit
  
  
• Education credits (American Opportunity, Lifetime Learning)
  
  
• Energy-efficient home improvements
  
  
• Electric vehicle purchases
  

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📃 Mid-year is a good time to collect receipts, organize documentation, and confirm eligibility for these credits and deductions.

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8. Audit-Proof Your Recordkeeping

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Tax audits aren’t common, but poor recordkeeping is one of the main reasons returns get flagged. Take this halfway point to get your files in order:

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• Digitally scan and organize receipts, invoices, and mileage logs.
  
  
• Make sure your accounting software (if applicable) is up-to-date and reconciled.
  
  
• Create a tax folder (physical or cloud-based) for 2025 with all relevant documents grouped by category.
  

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📂 Being organized now can save you time, money, and stress during tax season — and may help your tax preparer find additional deductions you might otherwise miss.

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9. Plan for Business Deductions and Depreciation

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If you run a business or have a side hustle, Q3 is a pivotal time to plan for deductions and capital purchases.

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• Consider whether large purchases (like equipment or software) should be made before year-end.
  
  
• Review your mileage, home office expenses, and travel-related costs — these are often underreported.
  
  
• Consult your tax advisor about Section 179 depreciation or bonus depreciation opportunities for 2025.
  
  

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📝 Advance planning helps you maximize deductions while staying compliant with IRS rules.

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10. Work With a Tax Professional

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A proactive mid-year check-in with your accountant, CPA, or tax advisor can help you:

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• Confirm that your current strategy aligns with recent tax law changes.
  
  
• Identify missed opportunities for savings.
  
  
• Run a tax projection to estimate your year-end liability.
  
  

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📅 If you typically rush to meet with your advisor in March or April, consider scheduling a mid-year consultation instead — when you still have time to course-correct.

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11. Watch for Tax Law Updates and Expiring Provisions

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Congress often updates tax laws in the second half of the year — sometimes retroactively. Be aware of:

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• Temporary tax credits or deductions expiring at year-end
  
  
• IRS inflation adjustments for retirement contributions, HSA limits, and income thresholds
  
  
• New legislation impacting business owners, such as changes to bonus depreciation, R&D credits, or clean energy incentives
  
  

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📨 Subscribing to IRS alerts, reading reputable financial news, or consulting with a tax professional will help you stay informed and agile.

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12. Set Goals for the Next Six Months

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Use the momentum of your mid-year review to set actionable financial goals:

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• Increase your retirement contributions
  
  
• Refinance high-interest debt
  
  
• Make a plan to donate to charities or contribute to a donor-advised fund
  
  
• Automate savings or investments
  
  
• Build or replenish an emergency fund
  
  

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💡 Every dollar you proactively manage now is one less worry at tax time.

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Final Thoughts

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The mid-year mark is more than a checkpoint — it’s a chance to take control of your financial story. By reviewing your income, withholdings, deductions, and overall strategy, you give yourself the opportunity to make smart, informed decisions before the pressure of year-end deadlines.

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Taxes may not be top of mind in July, but a bit of planning now can lead to significant savings, smoother filing, and less stress when April rolls around.

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Frequently Asked Questions (FAQs)

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1. Why is a mid-year tax review important?

A mid-year tax review helps you identify potential issues early, such as underpayment, overlooked deductions, or changes in income that could affect your tax liability. It gives you time to adjust strategies, increase contributions, or plan large expenses before year-end.

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2. What documents should I gather for a mid-year tax check-in?

You should collect pay stubs, investment statements, retirement contribution records, expense receipts (business, medical, charitable), estimated tax payment confirmations, and any documents related to life changes (e.g., marriage, birth, home purchase).

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3. Can I change my withholdings mid-year?

Yes. If you’re an employee, you can submit a new W-4 form to your employer at any time. This allows you to adjust your withholding based on changes in income, dependents, or tax status to avoid owing taxes next year.

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4. What if I’ve made a lot more money this year?

If your income has increased significantly — through a raise, bonus, side income, or investments — you may owe more in taxes. A mid-year check-in allows you to increase withholdings or make larger estimated tax payments to avoid a surprise bill and penalties in April.

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5. How often should I meet with my tax advisor?

Ideally, you should meet with your tax advisor at least twice a year: once mid-year and again at year-end. This ensures you stay compliant, take advantage of new opportunities, and make proactive decisions based on your current financial situation.

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I hope this information was helpful! If you have any questions, feel free to reach out to us here. I’d be happy to chat with you. 

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Vincere Tax can help you with the tax implications of business taxes, stocks, bonds, ETFs, cryptocurrency, rental property income, and other investments. 

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Being audited is comparable to being struck by lightning. You don't want to practice pole vaulting in a thunderstorm just because it's unlikely. Making sure your books are accurate and your taxes are filed on time is one of the best ways to keep your head down during tax season. Check out Vincere's take on tax season!

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This post is just for informational purposes and is not meant to be legal, business, or tax advice. Regarding the matters discussed in this post, each individual should consult his or her own attorney, business advisor, or tax advisor. Vincere accepts no responsibility for actions taken in reliance on the information contained in this document.