Final 2012 Tax Reminders

Check the balance in your flexible spending account. You must clean it out by Dec. 31 if your employer still has not implemented the 2½-month grace period that IRS now permits. Otherwise, any money remaining in your account is forfeited. Remember that a $2,500 annual ceiling on health FSA payins takes effect for 2013. People 70½ and over must take their payouts from IRAs and company plans by year-end. You start with your Dec. 31, 2011, IRA balances and divide each of them by the factor for your age, which you can find in a table in IRS Publication 590. You can use a higher factor if you are more than 10 years older than your spouse. The sum of these amounts can be taken from any IRA you pick. The process is similar for retirement plan payouts, but you must take the required amount from each plan. If you turned 70½ this year, you can delay the distribution for 2012 to April 1, 2013. But this option doesn’t apply for payouts in subsequent tax years, and the withdrawal for 2012 must still be based on the total of your IRA balances as of Dec. 31, 2011. And be careful if you decide to defer the distribution to 2013. Doing so means that you will be taxed in 2013 on two payouts: The one for 2012 that you deferred and the required withdrawal for 2013. The doubling-up of payouts in one tax year could have the effect of pushing you into a higher tax bracket. Note the various deadlines for retirement plans, IRAs and Coverdells. Generally, employer plans such as Keoghs must be established by Dec. 31 so payins to them can be deducted for 2012. Self-employeds who miss the Keogh setup deadline for 2012 can open up a SEP by the due date for filing the 1040 plus any extension. Keoghs and SEPs have the same payin cap: 20% of net self-employment earnings... the net profit shown on your Schedule C less one-half of your SECA tax liability. Regular IRAs must be established by April 15, 2013, for 2012 deductions. Payins are due by then as well. A filing extension will not buy you additional time. Nondeductible payins to IRAs and Roth IRAs are also due by April 15. Ditto for contributions made to Coverdell education savings accounts. If you are making a gift by check, be sure the donee deposits it in 2012 if you want the money to count as a 2012 gift for gift tax purposes. Alternatively, deliver a certified check to the recipient this year. That will count as a 2012 gift, even if the donee does not deposit the check into his or her account until next year. Remember that if you don’t use up the full $13,000-per-donee exclusion this year, you lose the shortfall forever. You can’t give a donee extra next year to make up for it. If you’re giving securities, endorse them over to the donee and deliver them by year-end if you want the gift to count for 2012. If you send them to the corporation late in the year to be retitled, the process might not be completed by Dec. 31. Mail checks for deductible items before year-end to ensure a 2012 write-off. You’re able to claim the deduction this year even if the checks don’t clear until Jan. And make sure you know the tax rules if you are charging deductible items. For charges that you make with a retail store credit card, you are allowed to claim the deduction for the item only in the tax year in which you pay the bill. For transactions made with a bank credit card, you take the write-off in the tax year that you charged the goods, even if you pay the bill next year.