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What to Do If You Missed the December 31 Tax Deadline for Key Deductions
We’ve all been there. It’s the start of January, and you feel that niggling sense of dread creeping in because—yep—you missed the December 31 tax deadline for certain deductions. Now you’re asking, “Is it game over for my tax savings this year?” Short answer: nope. There are still moves you can make to soften the blow and possibly even recapture some lost ground.
Read on to discover the top ways you can bounce back—especially if you’re self-employed—and salvage some of those critical deductions.
1. Check If You Can Still Contribute to a SEP-IRA
If you’re self-employed or own a small business, a Simplified Employee Pension (SEP) IRA can be your secret weapon for last-minute tax savings—even after December 31. Why? Because you can often make contributions to a SEP-IRA right up to the end of the extension period, regardless of when the return is actually filed. In addition, if you don’t already have a SEP account, one can be established up to the extended due date.
How does this help?
Bigger contributions: Depending on your income, you may contribute up to 25% of your net self-employment earnings (up to a certain cap).
Extended deadlines: You have until the due date of your return (plus extensions) to fund the plan. Translation: If you act before you file, you can still get a hefty deduction.
Pro Tip: Talk to our office about whether a SEP-IRA or another retirement plan (like a Solo 401(k)) might be the best fit. The right plan can significantly impact your bottom line.
2. Fund a Traditional IRA If You’re Eligible
Even if you’re not self-employed, you might still be able to squeak in an IRA contribution for the prior tax year. Traditional IRAs typically allow contributions up until the tax filing deadline, without extension, often April 15 (or the next business day if the 15th falls on a weekend or legal holiday).
Why consider it?
Potential tax deduction: If you are within certain income limits, your contributions may be fully or partially deductible.
Tax-deferred growth: More money in your account now could mean more growth later.
Heads-Up: Make sure you mark the contribution for the prior year when you’re making the deposit. Otherwise, it might default to the current tax year, and you won’t get the last-minute deduction you’re after.
3. Tie Up Loose Ends in Your Bookkeeping
If you scramble to update your books just once a year, now is the time to tidy them up—before filing. Missing receipts and inaccurate expense categorization can cost you valuable deductions (and create red flags for the IRS).
Quick checklist:
Reconcile your bank accounts: If the bank balance doesn’t match your bookkeeping software, find out why.
Track down any missing receipts: A missing $20 receipt might not sound major, but lose ten of those, and that’s $200 not documented.
Categorize expenses accurately: Was that lunch meeting truly business-related? Did you put your home office expenses in the right bucket?
Check 1099s: If you hired contractors, ensure you have the right forms (and that their info is correct).
Remember: Accurate records are more than a box-ticking exercise. They’re your best defense if the IRS ever comes knocking.
4. Review Any Last-Minute Business Purchases
If you’re a small business owner, you might’ve rushed some purchases before the new year to snag a deduction. However, any items you bought need to be placed in service by December 31 to count for that year’s taxes. Think: a new computer or piece of equipment. If you didn’t put it into use, you might have to wait until next year for the deduction.
But here’s the silver lining:
Even if you missed the December 31 in-service deadline, you can still deduct the purchase cost in the next tax year once it’s in use.
Consider Section 179 or bonus depreciation for big-ticket items, which can help you recover more of the cost in the first year you use them.
5. Chat With Our Office About Catch-Up Strategies
Sometimes, it’s less about what you can do on your own and more about what a seasoned tax strategist can see from the outside looking in. An advisor can show you:
Additional retirement vehicles you might use.
Unused credits or deductions from prior years you might apply.
Potential for filing an extension so you have time to assemble all the missing pieces.
The key: Don’t guess. Guessing is what got you here, right? Instead, invest in solid advice to make sure you don’t pay a penny more in taxes than you have to.
6. Mark Your Calendar for Next Year
Sure, you want to fix this year’s issues stat. But don’t forget to prevent the same scramble from happening again.
Automate your finances: Use software that tracks expenses and categorizes them in real-time.
Set up reminders: Mark dates for quarterly estimated taxes, year-end equipment purchases, and retirement contributions.
Book mid-year check-ins: Schedule a conversation with your tax pro before the December rush.
Next Steps: Don’t Go It Alone
Missing the December 31 deadline isn’t the end of the world, but it is a wake-up call. You still have options—like a SEP-IRA or Traditional IRA contribution, or even cleaning up your bookkeeping—that can recoup some deductions and reduce your taxable income.
Ready to Explore Your Options?
Our office specializes in guiding busy professionals and entrepreneurs just like you through the mess of missed deadlines and maximizing every possible deduction. Contact us today to set up a quick call. We’ll help you identify which strategies fit your situation so you can file on time and on the right foot this season—and (thankfully) be in better shape for next year, too.
Still Feeling That End-of-Year Dread?
Let’s clear it up—together. Schedule a call with our office, and we’ll show you how to catch up and keep more money in your pocket.
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Get to Know Prestige Accounting Services Group (previously Prestige Wealth Accounting Group)
Offices in Flemington, NJ and Califon, NJ
Our Mission: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we are on a mission to redefine the tax experience for individuals and small businesses. With a focus on personalized service, strategic planning, and expert guidance, we aim to empower our clients to succeed financially with confidence and ease.
Expertise in Action: With a wealth of experience and a team of dedicated professionals, we specialize in individual and small business tax preparation. While we excel in all areas of taxation, our passion lies in serving the unique needs of small business owners in New Jersey. We understand that small business taxation requires specialized knowledge and attention to detail, which is why we go above and beyond to ensure our clients receive the guidance and support they deserve.
Tailored Solutions for Every Client: Whether you're a high-net-worth individual seeking comprehensive tax planning or a small business owner in need of accounting and bookkeeping assistance, we have the expertise to meet your needs. Our team takes the time to understand your specific situation and develop customized solutions that align with your goals and objectives.
Why Choose Us?: What sets us apart from other New Jersey tax firms is our commitment to excellence and innovation in the field of taxation. We don't just prepare tax returns; we provide strategic insights, proactive planning, and actionable advice to help our clients achieve their financial goals. With a team of two CPAs, an EA, and an ERO, we have the expertise and resources to deliver exceptional service and results.
Your Success is Our Priority: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we measure our success by the success of our clients. We are dedicated to building long-lasting relationships, providing unparalleled service, and helping our clients thrive in today's ever-changing tax landscape.
We can't wait for you to experience the Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) difference.
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