Tax Moves for Individuals Before the New Year

Even though there’s less than one month left in the year, you still have some changes that can be made to help stretch your dollar! First, check your withholding with your employer. If you expect to owe more than usual in taxes, then it is likely easier to change your withholding now. It likely won’t eliminate any amounts owed, but it should make a noticeable difference in what you’ll owe after April 15, 2021.

Next, make a contribution to your “nest egg”. For some people, this may just be a savings account but for others it is likely a retirement account of some sort. If you predict that you’ll end up writing a check to the government, then it may be wise to just place the money in a savings account so you don’t incur any withdrawal penalties from your retirement account.

Another good practice is to check on your medical spending account such as a flexible spending account. If you still have a balance in your medical flexible spending account, make sure to spend that money this month. Be advised that some workplaces allow medical FSA owners to either 1) extend a grace period of March 15 to spend any unused funds or 2) roll over funds to the next year.

These small moves are only a couple of examples available to taxpayers in the month of December. The professionals at The Center for Financial, Legal, and Tax Planning, Inc. are more than knowledgeable with regards to tax decisions that can benefit both this tax year in addition to 2021. Please contact us at (618) 997-3436 with any questions.