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Year-End Tax Checklist: What You Need to Do Before December 31

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Year-End Tax Checklist: What You Need to Do Before December 31
Photo by JESHOOTS.COM / Unsplash

As the year comes to a close, it’s the perfect time to prepare your finances and ensure you’re maximizing your tax benefits. Whether you're an individual taxpayer or a business owner, taking proactive steps now can save you money and reduce stress when tax season arrives. Here’s a comprehensive year-end tax checklist to help you wrap up the year efficiently.

1. Review Your Income and Expenses

  • Gather all your income statements, including W-2s, 1099s, and any other income documentation.
  • For business owners, reconcile your income and expenses for the year.
  • Ensure all expenses are properly categorized and documented.

2. Maximize Retirement Contributions

  • Contribute as much as you can to retirement accounts like a 401(k) or IRA.
  • The contribution limit for 401(k) plans in 2024 is $23,000 ($30,500 if you're 50 or older).
  • For IRAs, the limit is $7,000 ($8,000 if you're 50 or older).

3. Take Advantage of Tax-Advantaged Accounts

  • Contribute to a Health Savings Account (HSA) or Flexible Spending Account (FSA).
  • Spend down your FSA funds if they don’t roll over into the next year.

4. Review Tax Withholdings and Payments

  • Check your most recent pay stub to see if enough tax has been withheld.
  • If you're self-employed, ensure your quarterly estimated tax payments are up to date.

5. Make Charitable Contributions

  • Donate to qualified charities before December 31 to claim deductions.
  • Keep proper documentation for any charitable donations.

6. Harvest Investment Gains and Losses

  • Review your investment portfolio for opportunities to offset gains with losses.
  • Be mindful of short-term vs. long-term capital gains taxes.

7. Spend Flexible Spending Account (FSA) Funds

  • If you have an FSA, make sure to use your funds before they expire.
  • Check if your plan allows for a carryover or grace period.

8. Organize Tax Documents

  • Gather and securely store all tax-related documents, including receipts, invoices, and previous returns.
  • Start organizing digital records for easy access.

9. Plan for Major Life Changes

  • If you’ve experienced a marriage, divorce, birth, or death in the family, update your tax filing status.
  • Review any new dependents or changes to income sources.

10. Consult a Tax Professional

  • Schedule a meeting with your tax advisor or accountant to review your situation.
  • Ensure you're aware of any new tax laws or credits that might affect you.

Final Thoughts

Taking the time to prepare your finances before the year ends can lead to significant savings and a smoother tax filing experience. Don’t wait until the last minute—start now and set yourself up for success in the upcoming tax season.

For personalized assistance, reach out to De Leon Tax Services. Our team is here to guide you every step of the way. Schedule your appointment today!