Heads-Up: 8 Tax Deadlines Are Almost Here

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April 15 might be the most notorious tax deadline, but Dec. 31 brings us more federal income tax deadlines than perhaps any other day of the year.

On top of that, in 2023, the final day of the year falls on a Sunday. As a result, if you’re trying to finish your end-of-year financial checklist, you might want to wrap things up by the last business day of the year — Friday, Dec. 29 — to be safe.

You should be aware of the following year-end IRS deadlines so you don’t miss out on tax benefits.

1. Contributions to most workplace retirement plans

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If your employer offers a 401(k) or other workplace retirement plan, you usually need to contribute by the end of the year. Those who make contributions via payroll deduction probably don’t need to worry about this deadline, though — unless there’s extra room to make an additional contribution.

If you haven’t maxed out your workplace retirement plan contributions for 2023 and want to add more to your nest egg, talk to an HR representative or log in to your plan administration account to move that money before the end of the year. For most types of workplace retirement accounts, you can contribute up to $22,500 for 2023 plus, if you’re at least 50, an additional catch-up contribution of $7,500.

2. Charitable contributions

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Feeling generous? You can help others with a charitable contribution. However, in most cases, you must itemize your tax deductions — as opposed to taking the standard deduction, as most taxpayers do — to deduct charitable contributions.

Contributions must be made by the end of the tax year to be deducted from that year’s income on your tax forms. So now’s the time to review your potential itemized deductions to see whether they add up to more than your standard deduction for 2023. If your itemized deductions are more, it’s advantageous for you to itemize your deductions for 2023 instead of claiming the standard deduction — and you’d therefore benefit from making more contributions to qualifying organizations before the end of the year.

3. Tax-loss harvesting

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If you’re rebalancing your portfolio or have less-valuable assets that you hope to get rid of, selling them before the end of the year can result in a potential tax deduction. If you realized gains by selling investments earlier in the year, you can use losses to offset those gains and reduce your capital gains tax liability. “Extra” losses can reduce your regular income by up to $3,000 for married couples filing a joint tax return and up to $1,500 for other taxpayers. Additional excess can carry forward to another year.

While you don’t want to sell an investment “just because,” if selling a losing investment fits into your overall strategy, it might make sense to get a tax deduction by realizing those losses before the end of the year.

4. Roth IRA conversions

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Are you planning to convert part or all of a traditional IRA to a Roth IRA? You need to have that conversion completed by year-end. You’ll also need to follow the rules set out by your trustee. For example, you might need to complete the conversion by a specific time on the last business day of the year. For 2023, that means having the paperwork done and submitted by Dec. 29.

Consider the tax implications of your conversion before you begin the paperwork. A financial professional might help you determine if a Roth conversion makes sense based on your income and tax bracket this year.

5. Required minimum distributions (RMDs)

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For anyone who must withdraw an required minimum distribution (RMD) for 2023, the deadline is Dec. 31. If you don’t take it on time, you can be penalized. Review your situation and the RMD formula to see if you need to take a distribution from your retirement account before the end of the year.

To learn more, see “Retirees Who Miss This IRS Deadline Risk a Steep Fine.”

6. Qualified charitable distributions (QCDs)

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If you’re on the hook for an RMD but don’t feel like you need the money (and don’t want to pay the resulting taxes), one way to get around this is to make a charitable distribution from your eligible account. You can donate up to $100,000 from your account each year — tax-free. Plus, this charitable transfer “counts” toward your RMD.

Review your situation and make your QCD by year-end to take advantage of the ability to be generous while meeting your RMD obligation.

7. Spending of health FSA funds

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For the most part, money in a flexible spending arrangement (FSA) is use-it-or-lose-it. Whatever’s left in your FSA at the end of the year might not roll over into the coming year. So, if you still have money in your FSA, it’s a good idea to make some last-minute medical appointments or check the list of qualified medical expenses to see if you can make some purchases to spend down the account.

Some FSA providers offer a grace period or allow you to carry over a portion of your FSA funds. Check with your plan provider to see if you have those options, or if you need to make a plan to quickly use the money in the FSA so you don’t end up losing it.

8. Contributions to most 529 plans

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Those saving for a child’s college education can contribute to a 529 plan at any time. States often establish these plans, and contributions don’t come with a federal tax deduction. However, some states offer tax benefits to those who contribute. For example, Arizona offers a tax deduction on state income taxes to residents who contribute to a 529, and Utah offers a tax credit based on contributions.

Check your state tax policy on 529 plans. If you want to make an additional contribution and reap the state-level tax benefits, you’re likely to make it happen if you contribute by the end of the year.

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