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December is a busy month for the IRS as it gears up for the new year's tax season. Numerous important tax deadlines fall during this month and could impact your finances and the way that you can file your tax returns after the turn of the year. Set yourself up for the most advantageous tax prep season by discovering what important IRS deadlines you should meet during the month of December.
Retirement Account Deadlines
The IRS exempts retirement contributions from taxation, which is why it may be smart for you to rethink your retirement savings strategy before December 31. That day is the deadline for:- Converting your investments to a Roth IRA
- Setting up a retirement account for the current year
- Opening a 401K for a small business
- Withdrawing the required minimum distributions from a 401K, IRA, or other retirement account
Employment Deadlines
December is also the last month for meeting several important employment-related tax deadlines. For example, December 12 should be marked on your calendar if you work for tips. You have until the end of that day to report these earnings to your employer.Alternatively, if you own and operate a business, you have until December 15 to meet several important deadlines of your own. The IRS has established December 15 as the last day to:
- Pay Social Security, Medicare, and withheld income tax for November
- Pay your fourth installment of your estimated federal income tax for 2016
- Deposit your business's non-withholding payroll taxes
- Pay regular method taxes for your business.
Failure to meet these employment-related deadlines could result in a fine or an IRS levy against your business or income. You can file your taxes with a clear conscious by remembering these dates and by reporting your income or paying your business's taxes accordingly.
Charitable Donation Deadlines
You can also lower your next year's tax burden by donating to eligible charities. You can claim these contributions on your taxes if you donate:- Money by cash or check
- Appreciated stock or real estate
- Clothing
- Household items
- Vehicles
You can also deduct your personal time that you donate if you incur expenses related to your volunteer service. However, to claim these donations you must submit receipts or written proof to the IRS along with your tax return.
Before you donate, you should make sure that the charity is legitimate to avoid being taken advantage of or putting your personal information at risk. You can verify the legitimacy of any charity by visiting the IRS's website at IRS.gov.
Investment Deadlines
December is also the last month to manage your investments to lower the amount of money that you may owe the IRS during the upcoming tax season. You have until December 31 to sell securities for a loss or gain.
This practice, called tax loss harvesting, allows you to have these funds exempted on your tax returns. It also eases your final tax season debt that you may owe the IRS.
December is the month to satisfy numerous important deadlines if you want to lower your tax burden and avoid fines or penalties during the upcoming tax season. You can avoid running afoul of the IRS by knowing what tax deadlines you should meet this December.
