The time to file taxes is growing closer. Don't just sit and wait for the inevitable. There are things you can do now to prepare.
Last Minute Deductible Donations
If you're like most taxpayers, December 31st is the final day to take actions that will affect your 2016 taxes. For instance, charitable donations are deductible in the year they were contributed. Donations charged to a credit card prior to the end of 2016 count for the 2016 tax year, even if the bill isn’t paid until 2017. If you write a check, it will count for 2016 as long you mail it by the last day of the year.
If you are over the age of 70 ½, you are usually required to take payments from your individual retirement accounts and workplace retirement plans by the end of 2016. Most workplace retirement account contributions should be made by the end of the year, but you can make 2016 IRA contributions until April 18, 2017. For 2016, the limit for a 401(k) is $18,000. For traditional and Roth IRAs, the limit is $6,500 if age 50 or above and up to $15,500 for a Simple IRA if you are 50 or older.
Did You Move?
If you moved during 2016, make sure to tell the IRS. To do this, send IRS Form 8822 (the “Change of Address” form) to the address included in the form’s instructions.
Did Your Name Change?
If you were married or divorced in 2016 and your name changed, let the Social Security Administration (SSA) know so the new name will match in IRS and SSA records. Do the same for any name changes of your dependents. A mismatch between the name on your tax return and the name the SSA has on file for you can result in issues processing your return, and might actually slow down your refund.
Make Sure You're Saving Copies of Your Tax Returns
If you haven’t kept copies of your tax returns in the past, you’ll want to start doing that now. The IRS is making changes to help guard taxpayers and validate their identities. For example, you might need to know your adjusted gross income amount from a previous tax return to confirm your identity.