1. Create a Filing System
If you don’t have a filing system for your tax records, you should start one. It’s always a good idea to save tax-related receipts and records. Keeping good records now will save time and help you file a complete and accurate tax return next year.
2. Adjust Your Withholding
If you’re an employee and you think that your tax withholding will fall short of your total 2016 tax liability, you may be able to avoid an unexpected tax bill by increasing your withholding. If you are having too much tax withheld, you may get a larger refund than you expect. In either case, you can complete a new Form W-4, Employee’s Withholding Allowance Certificate, and give it to your employer.
3. Report Changes in Circumstances
If you purchase health insurance coverage through the Health Insurance Marketplace, you may receive advance payments of the premium tax credit in 2016. It is important that you report changes in circumstances to your Marketplace so you get the proper type and amount of premium assistance. Some of the changes that you should report include changes in your income, employment, or family size.
4. Make Charitable Contributions
If you plan to give to charity, consider donating before the year ends. That way you can claim your contribution as an itemized deduction for 2016. A gift by check counts for 2016 as long as you mail it in December. Remember that you must give to a qualified charity to claim a tax deduction.
5. Pay Property Taxes
Pay your property taxes by Dec. 31 to count for 2016. That way you can claim your property tax payment as an itemized deduction for 2016.
6. Contribute to Retirement Accounts
You need to contribute to your 401(k) or similar retirement plan by Dec. 31 to count for 2016. On the other hand, you have until April 18, 2017, to set up a new IRA or add money to an existing IRA and still have it count for 2016.
7. Contribute to a Health Savings Account
For 2016, if you have self-only HDHP coverage, you can contribute up to $3,350. If you have family HDHP coverage you can contribute up to $6,750. You can make contributions to your HSA for 2016 until April 18, 2017.
8. Pay Estimated Tax if Required
If you receive income that’s not subject to withholding, you may need to pay estimated tax. This may include income such as self-employment, interest, or rent.