October 24, 2025
At a glance
What happened: With just 10 weeks left in 2025, multiple financial deadlines are converging — from IRS notices to portfolio rebalancing opportunities.
Why it matters: Missing key steps could cost $1,200 to $2,500 in tax corrections, trigger 25% RMD penalties, or amplify portfolio risk.
What to do: Review IRS math-error notices, check your tech exposure, and consider Roth conversions before December 31.
A year-end shaped by last week’s headlines
Last week’s news highlighted how taxes, markets, and government policy intersect:
- Global equity funds saw their largest weekly inflows in three weeks as U.S.–China sentiment improved. (Reuters)
- Congress passed a bill requiring the IRS to make math-error notices clearer, and the AICPA asked for IRS guidance on new tip and overtime deductions for 2025. (Journal of Accountancy)
- The IRS published its 2025–2026 Priority Guidance Plan, detailing new rulemaking areas. (IRS PDF)
- Markets surged as tech stocks hit new highs despite the prolonged U.S. government shutdown. (Investopedia)
Together, these developments frame the financial decisions many households are weighing before 2026 arrives.
1. Tax planning opportunities
The news: About 5 million taxpayers received IRS “math error” notices for their 2024 returns, with average corrections of $1,200 to $2,500. Congress is requiring the IRS to clarify these letters, and professional groups are urging faster guidance on new deductions. (Journal of Accountancy)
Why it matters: Year-end is the last window to correct returns and make Roth conversions at 2025 tax rates before potential 2026 increases.
Example (illustrative only):
Maria, 52, has $85,000 in her 403(b). If she converts $30,000 to a Roth IRA while in the 22% bracket and that bracket rises to 25% next year, the 3-point gap equals about $900 in current tax difference. Conversions are taxable in the year made, but future withdrawals may be tax-free if held long enough.
Key takeaway:
Conversions must be completed by December 31, 2025, and the taxes should ideally be paid from cash. Federal tax brackets enacted under the 2017 law expire after 2025.
2. Investment risk management
The news: Global equity fund inflows topped $11 billion last week, reflecting optimism but also adding concentration risk. Tech exposure in average portfolios has reached about 33%, up from 25% two years ago. (Reuters; CNBC)
Why it matters: A $100,000 portfolio with 33% in tech could experience a $15,000–$20,000 swing if the sector corrects sharply.
What to review:
- Check each fund’s sector breakdown, including “hidden tech” such as Tesla and Amazon.
- Rebalance if one sector dominates.
- Tax-loss harvesting can offset up to $3,000 of ordinary income.
3. Retirement account optimization
The news: Fiscal data shows widening deficits — $7 trillion spent vs. $5.2 trillion collected — while the IRS guidance plan lists new updates for retirement accounts. (IRS PDF)
Why it matters: If you’re 73 or older, RMDs must be taken by December 31 to avoid a 25% penalty.
What to review:
- Calculate your RMD for each account.
- Consider qualified charitable distributions (QCDs) to meet RMDs tax-efficiently.
- Review and update beneficiaries on all accounts.
4. Hidden tax and policy deadlines
The news: The IRS Priority Guidance Plan also highlights pending rulemaking for retirement accounts, business deductions, and credits. The AICPA’s letter requests clarifications on new wage-related provisions. (Journal of Accountancy)
Why it matters: Tax rules can shift quietly between filing seasons. Reviewing your 2024 return early can help prevent refund delays or avoidable penalties.
What to review:
- Check credits like the Child Tax Credit and EITC.
- Correct errors before November 15 to allow processing time for amendments.
5. Trade and global flow signals
The news: U.S.–China trade talks progressed, boosting equity inflows to a three-week high. (Reuters)
Why it matters: Global fund flows often precede shifts in sector or geographic performance.
What to review:
- Compare U.S. vs. international weights in your portfolio.
- Rebalance if your exposure drifts from long-term targets.
6. Tech valuations and market timing
The news: On October 20, the Dow and Nasdaq closed sharply higher as large-cap tech stocks set new records despite continued fiscal uncertainty. (Investopedia)
Why it matters: Elevated valuations don’t guarantee continued gains.
What to review:
- Trim concentrated holdings to reduce volatility.
- Avoid year-end trades on or after December 24, when markets close early.
What to do now
Based on the year-end clock (68 days left), here’s your Finhabits year-end checklist — grounded in the headlines shaping the market this month.
Check for IRS math errors (by November 15)
Who: Anyone who filed 2024 taxes
Why: 5 million IRS notices; average $1,200–$2,500 correction
How: Review Form 1040 lines 28–31; confirm credits; verify 1099/W-2 income; compare the IRS notice to your filed return; request correction if needed.
Impact: Recover $1,200–$2,500 and avoid refund delays.
Source: IRS Newsroom, Journal of Accountancy
Analyze your true tech exposure (by November 30)
Who: Investors with $25,000+ in taxable or IRA accounts
Why: Average tech weight ≈ 33%; a sector drop could mean $15,000–$20,000 loss in a $100,000 portfolio.
How: List holdings, check sector breakdowns (including hidden tech), rebalance to your target range.
Impact: Reduce volatility and align risk with goals.
Source: CNBC, Reuters
Execute strategic Roth conversions (by December 31)
Who: Households expecting higher taxes after 2025
Why: Lock in current tax rates before possible 2026 increases of 3–5%.
How: Convert only up to your bracket’s top; pay taxes from cash; document your basis; retain records for Form 8606.
Impact : Potentially lower lifetime taxes; tax-free growth; no future RMDs on Roth IRAs.
Source: CNBC
Harvest tax losses while rebalancing (by December 24)
Who: Taxable account holders with concentrated positions
Why: Offsetting realized gains can reduce taxable income by up to $3,000.
How: Realize losses; avoid wash sales (30-day rule); reinvest in diversified ETFs.
Impact: Reduce your 2025 tax bill and manage risk heading into 2026.
Source: IRS Publication 550
Review beneficiaries and RMD strategies (by December 15)
Who: Age 73+ or inherited IRA beneficiaries
Why: Missed RMDs carry a 25% penalty on the shortfall.
How: Calculate RMDs; consider qualified charitable distributions; update beneficiaries.
Impact: Avoid penalties and keep your estate plan aligned.
Source: IRS Priority Guidance Plan 2025–2026
Looking ahead
Lower tax brackets remain through December 31, 2025. Rates may rise 3–5% in 2026.
Advisors expect early 2026 to bring widespread portfolio rebalancing as investors reassess tech exposure and tax strategies.
Most likely: Stable rates and moderate volatility through Q4 2025.
Best case: Calmer markets and lower inflation.
Worst case: A mix of tech pullbacks and delayed tax action into 2026.
Watch for:
- Late October: IRS 2026 contribution limits
- November/December statements for sector weights
- Trade settlement dates before market holidays
(Source: S&P Global Economic Preview)
Sources
- Reuters – Global equity funds attracted the largest weekly inflow of the month
- Journal of Accountancy – Congress passes bill requiring IRS to clarify math-error notices
- Journal of Accountancy – AICPA seeks IRS guidance on tip, overtime tax deductions for 2025
- IRS – Priority Guidance Plan (2025–2026)
- CNBC – Hidden tech concentration in portfolios
- CNBC – Roth conversions: Key year-end considerations
- Investopedia – Markets news, Oct 20, 2025: Stocks end sharply higher
- IRS – Publication 550: Investment Income and Expenses
- S&P Global – Week ahead economic preview: Week of Oct 20, 2025
Information current as of October 24, 2025, 2:35 PM ET.
Disclaimer
This publication is informational and educational.
Examples are illustrative, based on hypothetical scenarios.
Projections are estimates, not guarantees.
All investments involve risk, including possible loss of principal.
Tax rules and deadlines may change.
Always consult a qualified financial, tax, or legal professional for guidance specific to your situation.
