December may be the season for merrymaking, but for employees, it also signifies the annual tax deadline scramble. While deadlines loom, fret not! This guide will equip you with crucial year-end tax actions to ensure a smooth and stress-free tax season.
Tip Reporting: Don’t Get Caught Out in the Cold (December 12th)
If you’re someone who relies on gratuities to make ends meet, listen up! Did you know that if your November tip haul exceeded $20, you’re legally obligated to report it to your employer by December 12th? You’ll need to use the trusty IRS Form 4070, which helps your employer withhold applicable taxes from your regular wages. This ensures you avoid any nasty surprises come tax filing time. Remember, if your regular salary doesn’t cover the tax bite, your employer will note the difference on your W-2, and you’ll need to settle the score when you file your return.
IRA Withdrawals: Navigate the Deadline Maze (December 31st)
Traditional IRA account holders, pay attention! This is your last day to withdraw funds penalty-free if you were born before January 1st, 1951. If your birthdate falls within the January 1st, 1950 to December 31st, 1950 window, you get a grace period till April 1st, 2023 for your first distribution. Remember, if you’re required to take a distribution in 2022, and your IRA custodian isn’t open on December 31st, don’t wait! Initiate the withdrawal beforehand to avoid any hiccups.
Deductible Expenses: Use Them or Lose Them (December 31st)
This is your final call to settle deductible expenses that will benefit your 2022 tax return. Remember, this doesn’t apply to IRA, SEP, or Keogh contributions, which you can still make after December 31st. So, scour your records for any outstanding car repairs, medical bills, charitable donations, or other eligible expenses you haven’t paid yet. By claiming them now, you can potentially lower your taxable income and decrease your tax liability.
Proactive Planning: Beat the Deadline Blues (Before December 31st)
Remember, things don’t always go according to plan. If some actions on your tax to-do list seem like they might not get done by December 31st, don’t wait! Tackle them earlier to avoid last-minute stress. The earlier you act, the smoother your tax season will be.
Bonus Tip: Consider consulting a tax professional for personalized guidance, especially if you have complex financial situations or significant income changes. They can help you navigate the nuances of tax regulations and maximize your deductions and credits, saving you valuable time and money.
Remember, knowledge is power, especially when it comes to taxes! By understanding these key deadlines and taking proactive steps, you can ensure a smooth and stress-free tax season. So, ditch the tax anxiety and embrace the spirit of the season with peace of mind!