The end of the year is quickly approaching and it goes without saying that most of us are starved for time. December may be a hectic month, but it is also a great time to get your financial house in order before the New Year. Here are some quick and easy year-end financial fixes that will help you start 2017 off right.
As the end of the year draws to a close, it is a great time to consider some planning strategies that can help lower your tax bill. While good tax planning may help save you money, it can also you achieve a variety of other financial goals.
Here are a just a few benefits that year-end tax planning may provide: Continue reading
With November around the corner, we’re beginning to think about year-end tax & financial planning.
In fact, now is a great time to focus on last minute tax and financial planning moves to save money for 2013 (and possibly longer!).
Here are a few ways to save $ before New Year’s Day:
1. Make charitable gifts of appreciated stock. If you have appreciated stock that you’ve held for more than a year and you plan to make a significant charitable contribution before the end of the year, you’re probably best off keeping your cash and donating the stock instead. Why? You’ll avoid paying tax on the appreciation and you’ll be able to deduct the entire charitable gift at its full fair market value. It’s a win for you & for the recipient of your gift.
2. If it looks like you will owe taxes for 2013, adjust your federal income tax withholding before the end of the year. If you missed the mark on planning ahead, there is still time to make adjustments and avoid penalties.
3. If you have a healthcare Flexible Spending Account (FSA), use it, don’t lose it! Make sure to take advantage of spending the pre-tax money in the account before the end of the year for any remaining amounts over $500. Anything under $500 can now be “rolled over” into the new year, a newly modified ruling by the IRS.
4. If you pay quarterly estimated taxes (which are due on January 15, 2014), you can prepay the state estimated tax payment by the end of the year to receive a tax deduction (subject to certain limitations and the alternative minimum tax).
5. If you are a senior over the age of 70.5:
- Make charitable donations from your IRA account, which are set to expire this year.
- Make sure you take your required minimum distribution (RMD) from your IRA. Failure to take your RMD results in a penalty of 50% of the amount not withdrawn.
6. If you work & have a 401K:
- Make sure to maximize your 401K contributions – don’t miss out on money you can contribute on a pre-tax basis (not to mention employer matching opportunities).
7. If you’re self-employed:
- If you are a sole proprietor, don’t miss the opportunity to minimize taxes by employing your children under the age of 18. Paying wages to children under 18 shifts income to your child who is in a lower tax bracket; in fact, you may be able to avoid taxes entirely because of your child’s standard deduction (assuming the wages paid are less than or equal to the 2013 standard deduction of $6100). Additionally, since your child is earning income, he/she is eligible to contribute to an IRA account, thereby getting an early start on saving for retirement.
- If you are looking to reduce your tax bill while saving for retirement, you may wish to consider establishing a retirement plan before the end of the year (such as a defined contribution plan or a defined benefit pension plan). These plans need to be established before the end of the year and contributing money now to these accounts starts the tax-deferred growth on your contributions.
Now is a great time to make year-end adjustments. If you are interested in learning more about year-end financial planning, call us.