Year-End Tax Reminders for 2011

With the holidays and the end of 2011 upon us, it is time for year end tax strategizing.

Flexible Spending Account Balances

Unless your employer has adopted the 2 ½-month grace period permitted by theIRS, be sure to check your balances on any flexible spending accounts and empty them out by December 31. Failure to do so could cause forfeiture of any money remaining in your account.

In addition, you will want to be careful in deciding what amount you should put into your flex plan for 2012, because a $2,500 annual cap on FSA payins will go into effect in 2013.

Year End Gifts

If making a gift by check, be sure the recipient of the check deposits it in 2011 if you want the money to count as a 2011 gift for purposes of the gift tax. Delivery of a certified check to the recipient prior to December 31 will accomplish the same goal, even if the recipient does not make the deposit until next year. Keep in mind that if you don’t fully exhaust the $13,000-per-donee exclusion this year, the shortfall does not carry over.

Similarly, if giving a gift of securities, be sure to endorse them over to the donee and deliver them by year-end if you want the gift to count for 2011.


If writing a check for a deductible item, be sure to mail the check before Dec. 31 to guarantee a 2011 write-off. Even if the checks don’t clear until after January 1, you can still claim the deduction for 2011.

If charging deductible items, be sure to follow the proper procedures. If a charge is made on a retail store charge account, you may claim the deduction for the item only in the tax year in which you pay the bill. However, if the charge is made with a bank credit card, you claim the deduction for the tax year in which the goods were charged, regardless of when you pay the bill.

Plan Deadlines

Pay careful attention to the various deadlines affecting retirement plans, IRAs and Coverdells. Most employer plans, including Keoghs, must be established by Dec. 31 to get a deduction for 2011. For SEPs, though, you will have until the due date for filing your return plus any extension. Accordingly, self-employed taxpayers who miss the Dec. 31 deadline for Keogh setup and who wish to adopt a SEP instead will have time to set up a SEP. Contributions to plans for 2011 are due no later than October 17, 2012.

Regular IRAs, on the other hand, must be established byApril 16, 2012in order to take advantage of deductions for 2011. All payins are due by that date as well. Extensions on time to file will not buy you additional time in this case.

In addition, nondeductible payins to IRAs and Roth IRAs and contributions to Coverdell education savings accounts are also due by April 16, 2012.

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