From grabbing last minute holiday gifts to calculating just how much PTO will rollover to the new year, there’s a lot to think about come year end. That’s why we’ve created this guide to help you finish your 2020 tasks. The items listed here will help you make sure your information is ready for your employer and that you receive accurate information in tax season.
Dive into the details on FSAs and HSAs and determine what's right for you.
Verify Your Information
It’s important to confirm your personal information on file with your employer is accurate and up-to-date.
Ensuring your personal information is accurate helps prevent errors that could require tax return corrections down the road, and will make it more likely that your personal tax documentation for 2020 is correct. Here are few items to confirm with your employer:
Social Security Number
Tax exemption status for FICA/FUTA
Review Your Tax Withholding Information
The end of the year is also a great time to review your tax withholding information. Your financial situation might have changed in the year, so it’s important to double check that the amounts being withheld for your federal, state, and local taxes make sense.
Use the Tax Withholding Estimator from the IRS to make sure you’re not having too little tax withheld from your paycheck which could result in a tax bill or penalty at tax time. You can also use the calculator to estimate how much tax you do want withheld from each paycheck.
Confirm Your Final 401(k) Contributions
If you’re participating in your employer’s 401(k) plan, make sure to coordinate your final contributions of the year with your company. End of year is the time to take full advantage of the pre-tax benefits of a 401(k) and max out your contributions either through your salary or final bonus/commission payments of the year.
As a reminder, the 2020 IRS annual contribution limit for those participating in a 401(k) plan is $19,500 if you’re under 50 and $26,000 if you're 50 or older.
Spend Your Flexible Spending Account Dollars
If you have a flexible spending account (FSA) as part of your health benefits, make sure to spend all of your funds before December 31, 2020. FSA funds do not roll over to the next calendar year, so it’s important to to use those funds before they expire.
With just a few days left in the year, check out the FSA Store for items that are eligible to be paid for with an FSA.
Double-check Your Paid Time Off Balance
It’s a common practice for employers to limit the amount of paid time off (PTO) that you can carry into the next calendar year. Now is a great time to check your PTO balance and consider taking a day off to recharge and relax.
If you have PTO that will expire at the end of the year, talk to your manager about setting a day aside for a mental health day or staycation. You deserve it!
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.