End-of-Year Income Tax Checklist for the 2023 Tax Year

When learning how to file small business taxes, one of the top small business tax tips is to review your tax documents checklist. December is coming up fast, and that means the 2023 tax year is coming to a close with it. Wherever the numbers fall on December 31st, that’s what you have to deal with in April. It’s important to think ahead, go through your income tax checklist, and prepare your business for year-end. That way, you don't get a call from the Internal Revenue Service regarding your tax credits. 

Of course, with the holidays and Q4 rush, the winter gets busy for everyone. There’s no better time than right now to gather your tax documents and get a jump start on your end-of-year tax preparation checklist. 

Check out our recommendations to get ahead for tax season.

Do I Need to File Taxes?

First things first. Do you need to file taxes next year? Before you rely on a tax preparer, know that not everyone in the United States is actually required to file taxes each year. If you meet certain requirements, you might not be required to file a federal tax return.

Under 65

You may not have to file a tax return if your income is low enough. If you are under 65 and your income falls beneath the following thresholds, you generally do not need to file a federal return: 

Above 65

Do I need to file taxes if I’m retired? If you are over 65, retired or not, you do not need to file a federal return if your income is under the following threshold: 

End-of-Year Income Tax Checklist

Now that you’ve determined whether you need to file a return, let’s take a look at the income tax checklist itself. 

Here are the key items to ensure your personal finances are in optimal shape as you move toward December. 

1. Maximize Retirement Contributions

The first item on your end-of-year tax checklist is to maximize retirement contributions. Each year, you can reduce your taxable income by putting it directly into your retirement savings. You can maximize your retirement contributions whether you have a Roth or traditional IRA, but you must do it before 2022 ends. 

For 2023, the total contributions you make each year to your traditional and Roth IRAs can't be more than:

• $6,000 ($7,000 if you're age 50 or older), or
• If less, your taxable compensation for the year

2. Maximize HSA Contributions

If you have a health savings account (HSA), you have a triple benefit opportunity. 

HSA contributions reduce your taxable income, any investment growth within the account is tax-free, and qualified withdrawals for medical expenses are tax-free.

These are the new limits on tax-deductible HSA contributions in 2023:

• Individuals: $3,850 
• Families: $7,750 

Individuals 55 and up can make an HSA catch-up contribution of up to $1,000 before the end of the year.

3. Maximize Your Personal Tax Deductions

If you haven’t already, you need to decide if you will itemize your deductions for 2023 or claim the standard deduction. A common strategy is to alternate each year, which lets you maximize your personal deductions by concentrating them in the same year.   

Here are the most common expenses claimed for itemized deductions:

• Charitable giving
• Mortgage interest
• Property tax
• Other non-federal sales tax or income tax expenses
• Uninsured disaster losses
• Uninsured medical costs that exceeded 7.5% of your adjusted gross income

Remember that for the upcoming tax season, there is no longer an option to claim any charitable donations unless you itemize all deductions. Whatever you choose, make sure you keep receipts and careful records of all these expenses! 

4. Contribute to 529 Plans

There’s still time to maximize 529 plan contributions. These are plans designed to help families save money for future education expenses. There are two 529 plans: an education savings plan and prepaid tuition. 

These qualified tuition plans are offered at the state level, so your choices may vary depending on where you reside. However, all 50 states and the District of Columbia offer at least one of the two options. 529 contributions can’t be deducted on your federal return, but tax deductibility for 529 contributions for state returns varies.

5. Verify IRA Distributions

If you receive disbursements from an IRA or another fund, you should verify your distributions before the end of the year. You need to be sure you stay below the proper thresholds for the 2023 tax year. 

Keep up with your required minimum distribution (RMD). RMDs now apply for most retirement plans when you turn 72.   

6. Record Business Tax Deductions

Another essential item on your checklist for income tax preparation is to review all of your tax-deductible business expenses. If you’re a small business owner, then many of your costs can be claimed and deducted from your taxable income. 

Keep precise records of all these possible expenses, and be sure to have the expenses themselves scheduled before the end of the year if you want to include them as you file your taxes in 2023. 

Here are some common reasons for tax deductions for businesses:

• Business travel and meal expenses
• Car and truck use for business purposes
• Office expenses and office supplies
• Accounting and tax software
• Rent and utilities for office space
• Business-related bank account fees
• Cost of goods sold
• Health insurance premiums
• Advertising and marketing
• Legal and accounting services
• FICA and self-employment tax paid 

W-2 Employees, 1099 Employees, and the Unemployed

This checklist might vary slightly depending on your terms of employment. Mostly, this will affect the tax statements form that reports your income. Regardless of the forms used, however, freelance income, employee wages, and unemployment income all count as taxable income and must be reported.  

If you are a W-2 employee, you may not deduct business expenses for that job on your personal tax return. Business owners and 1099 freelancers can deduct business costs, and unemployed individuals may be able to deduct job search costs. 

Business owners and 1099 freelancers must also make quarterly estimated tax payments on their income throughout the year, using either their Employer Identification Number or their Social Security Number.

Key Dates for the 2023 Tax Year

Finally, as the tax year ends, keep in mind some key dates. These dates will help you stay ahead of the game and sail through the complex tax preparation process in early 2023. 

• 13 January: IRS Free File opens
• 17 January: Due date for the tax year 2023 fourth quarter estimated tax payment.
• 23 January: IRS begins the 2024 tax season and starts accepting and processing individual 2023 tax returns.
• 27 January: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use the prior-year income to qualify.
• 15 April: National due date to file a 2024 tax return or request an extension and pay the tax owed due to the Emancipation Day holiday in Washington, D.C.
• 16 October: Due date to file for those requesting an extension on their 2023 tax returns.

Consult with a Professional Accountant

It isn’t too late to start your end-of-year income tax checklist for 2023. Starting now will help you improve your tax situation and make tax season go more smoothly. As soon as the calendar rolls over to January, many opportunities pass you by.

If you’re worried about your tax obligations, or if you know you’ll need help with your income tax filing preparation, schedule a meeting with a tax advisor now. Work with the pros at 1-800Accountant to complete your income tax checklist, and ensure you’re prepared.