Ready, Set, File! Use This Checklist to Make Sure You're Ready to File Your Taxes
Although the filing deadline is months away, there are things you should do now to prepare
With Christmas just days away, the last thing on most people's minds is filing their taxes. However, even though the deadline to file is months away, there are some things that you should do now to get ready.
According to the IRS, December 31 is the last day to take actions that will impact tax returns for most people, says ConsumerAffairs. Here are a few steps that you can take now:
- Make a Donation. Any donation you make to charity is deductible in the year that you make it. If you charge a donation to a credit card before the end of 2016, it will count for the 2016 tax year, even if you don't pay the bill until 2017. Donations made by check will count for 2016 as long as you mail them by December 31.
- Get a Payment from Your Retirement Plan. Are you over the age of 70.5? If so, you generally have to receive any payments from your IRAs and your workplace retirement plans by the end of the year. However, if you reached the age of 70.5 in 2016, a special rule allows you to wait until April 1, 2017 to receive the payments.
- Contribute to Your Workplace Retirement Account. Most contributions to workplace retirement accounts should be made by the end of the year. However, you can make contributions to an IRA that will count for 2016 until April 18, 2017. For 2016, the limit for a 401(k) contribution is $18,000. For both traditional and Roth IRAs, the limit is $6,500 if you are 50 or older, while the limit is $15,500 for a Simple IRA if you are 50 or older.
- Move? Tell the Government. If you moved at some point this year, you should notify the U.S. Postal Service, your employer, and the IRS. To inform the IRS, mail IRS Form 8822 (Change of Address) to the address listed in the form's instructions. If you bought health insurance through the Marketplace, you should inform the Marketplace if you moved out of the area covered by your current plan.
- Change Your Name? Let Social Security Know. Did you change your name due to marriage or divorce? If so, you need to inform the Social Security Administration (SSA) so that your new name will match IRS and SSA records. If you have a dependent whose name changed, you also need to inform the SSA about that change. If there is a mismatch between the name on your tax return and the name in the SSA records, it may lead to problems in processing your return and might even delay your refund.
- Update Your ITIN. As of January 1, 2017, if you have not used an Individual Taxpayer Identification Number (ITIN) at least one time during the past three years, that ITIN will be invalid for use on future returns. Also, ITINs whose middle digits are 78 or 79 will expire on January 1. If your ITIN is about to expire and you need to file a return in 2017, you have to renew the ITIN. Start the renewal process now so you won't run into any delays.
- Hurry Up and Wait. The IRS has seven weeks from January 1, 2017—or from the date when Form W-7 is mailed, whichever is later—to inform you what the status of your ITIN application is. If you wait to submit Form W-7 until the peak filing season—or if you send it from overseas—you'll need to allow between nine and 11 weeks. If you do not renew your ITIN before you file a return, the return may be delayed and you may not be eligible for some important tax credits.
- Dig Out Those Old Returns. It is important to keep copies of old tax returns while the IRS makes changes to protect taxpayers and verify their identities. Starting in 2017, if you use a software product for the first time to do your taxes, you may need your Adjusted Gross Income amount from a previous tax return so that the IRS can verify your identity.