The year has turned over, and some assume that it’s too late to log any more tax benefits for 2012. December 31 has passed, and now it’s 2013. However, before you figure your taxes for 2012, it’s worth noting that you can still have a tax move or two to make.
Deductions You Can Take Until April 15
If you still want to squeeze in a 2012 tax deduction, you can – if you have a Traditional IRA and/or a Health Savings Account. With a Traditional IRA (there is no tax deduction for a Roth IRA contribution), you can make contributions until April 15 and still count them as previous year contributions. The same rules apply to contributions made to your Health Savings Account.
After you figure your taxes, if you want to reduce your income by a little bit, and you still haven’t reached your contribution limit for 2012, you can get a deduction. Realize, though, that you will need to be careful to specify that you are making a previous year contribution, and not a current year contribution. You should also realize that if you decide to make a previous year contribution, you will not be able to count it for 2013; you can only claim a contribution in one tax year.
Do You Still Have Time to Use Flexible Spending Account Money?
Unlike the Health Savings Account, which operates a lot like a health care IRA and allows you to roll your money over from year to year, the Flexible Spending Account is use it or lose it. Many employers require you to use your money by December 31, or lose the balance of what’s in the account.
Some employers, however, allow you until March to use your money. Before you assume that all is lost with your Flexible Spending Account, double-check the terms. If you have until March, now is a good time to get some dental work done, or arrange for other appointments so that you can use up the money in your account.
As you plan for 2013, think about perhaps adjusting your FSA contributions so that you aren’t running into the last minute rush and risking the loss of your money.
Plan Ahead for 2013
Now is a good time to do your best to plan ahead for 2013. Think about how you can increase your tax-deductible contributions to retirement accounts and Health Savings Accounts (if you qualify). These are accounts that can help you prepare for a more secure financial future, while at the same time providing you with a tax benefit right now.
Also, consider that there is a good chance that you will have a slightly smaller paycheck. Not a lot has been completely decided regarding the fiscal cliff and the debt ceiling, so there is some uncertainty over what’s likely to affect you. Be prepared for the possibility that you will owe more in 2013, though, and start thinking about the deductions and credits you can use throughout the year to reduce your overall tax liability.