As the end of the year approaches, it’s the perfect time to start thinking about your tax preparation strategies to ensure you’re ready for the upcoming tax season. Here’s a comprehensive year-end tax preparation checklist with our recommended essential steps to help you get through tax season.
- Review Your Income. Did you get a raise or a part-time job to boost your earnings? Assess your current income for the year – you may be surprised about what you find. An essential aspect of tax preparation is finding out if your income change changed your tax bracket.
- Maximize Retirement Contributions. Contribute the maximum allowable amount to your retirement accounts, such as a 401(k) or IRA, to reduce your taxable income. Depending on your age, it could be a great way to set money aside and save on your tax bill.
- Charitable Contributions. Can you save money on taxes and give to qualified charitable organizations? Give before year-end to get potential tax deductions.
- Capital Gains and Losses. Investors should review their portfolios and consider selling investments with capital losses to offset gains.
- FSAs and HSAs. Give your Health Savings Account the max if you have a high-deductible health plan. Anything you contribute is tax deductible. Spend any remaining funds in your Flexible Spending Account before they expire, as they are typically use-it-or-lose-it.
- Business Expenses. Business owners pay attention: Make sure you have deducted all possible business expenses, including mileage, equipment purchases, and home office expenses.
- Required Minimum Distributions. If you’re over 72 years old and have retirement accounts, make sure you take your required minimum distributions to avoid penalties.
- Consult a Tax Professional. If you have a complex financial situation, it’s always best to talk to a tax professional. At the offices of Charles L. Bassett Jr. CPA, we have decades of experience in the financial industry, and we would be happy to assist you.
Following this year-end tax preparation checklist, you can act now and optimize your financial situation and minimize tax liability. Contact us if you have questions about preparing your taxes. We are a small, customer-focused firm that is working for you.