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A Financial Checklist to Help You End the Year Strong

The end of a calendar year is an important time to ensure that you are making the most of your money. Use these tips to capture deductions, avoid penalties and minimize taxes on your income and investments. The good news – not all current-year tax deadlines occur on December 31st so use this guide to prioritize the steps you should take between now and tax time.


Year-end Financial Checklist


Required distributions from IRAs must be done by year-end for those age 72 and older

  • This is critical because the penalty for not taking your distribution is equal to 50% of the distribution you didn’t take!

Charitable giving must be done by year-end to qualify for a deduction on this year’s tax return

  • Many people make qualified charitable donations from their IRA, donations of stock or donations to donor-advised funds in December. Getting your charitable gifts done by the end of November is a best practice to be sure your gifts happen by the year-end deadline.

Employee 401(k), 403(b), 457 plan contributions are due by December 31st

  • Review a recent pay stub to make sure you are on track to contribute the maximum amount. If not, ask your employer to increase your contributions from your remaining paychecks for the year.

Contributions to 529 education accounts need to be done by year-end to claim a state tax deduction


Use up any money remaining in your flexible spending account

  • Some employers allow you to carry over FSA balances until early March while others have a December 31 deadline.

Review your tax projections

  • Have you paid enough tax through withholding and/or estimated tax payments? Now is a good time to see how the tax you have paid stacks up against the tax you will owe with next year’s return. If you find you are underpaying, increase withholding from through pay roll or make a quarterly estimated payment by January.

If you have enough write-offs to itemize deductions, consider making your 4th quarter state estimated tax payment before year-end to claim the deduction this year. Tax payments are deductible based on the year you pay the tax, not the year to which the tax applies.

  • If your medical bills, state taxes, real estate taxes, mortgage interest and charitable giving total more than $12,950 for singles and $25,900 for joint filers, you may itemize rather than taking the standard deduction.

Realize capital losses

  • In non-retirement accounts, selling positions that are worth less than you paid for them allows you to capture a realized loss for tax purposes. These losses can offset other capital gains or be used as a deduction of up to $3,000 against other income. Reinvest the proceeds into a similar part of the market so the sale doesn’t negatively affect your investment returns.

Make the most of a low-income year

  • If you are in the bottom two tax brackets, capital gains are taxed at 0% so you may intentionally sell an asset that has appreciated in value while it costs little or no tax. A low-income year can also be an ideal time to do a Roth conversion.

Want to learn more on harvesting losses or doing a Roth conversion? Read this.


Current Year Tasks with Next Year Deadlines


Due in January

  • 4th Quarter federal and state estimated tax payments

Due in April

  • IRA contributions

  • Roth IRA contributions

  • Health Saving Account contributions

  • If you haven’t contributed the maximum to your health savings account, you still have a chance! Deposits do not have to come directly out of your paycheck; you can make a supplemental HSA contribution from your checking and savings account. Remember that the maximum HSA contribution is either $3,650 or $7,300 depending on whether you have individual or family coverage and that your employer’s contributions DO count toward the overall limit. For example, an individual whose employer deposits $1,000 into their HSA can contribute no more than $2,650.

  • Employer profit-sharing contributions

Due in September

  • Cash balance plan and defined benefit plan contributions

Due in October if filing an extended return

  • SEP IRA contributions

  • SEP IRAs can be opened after January 1st and funded up to the extended due date of your tax return.

I hope these tips help you end the year strong and set yourself up for a prosperous year ahead!


Download the checklist below.

Financial Checklist
.pdf
Download PDF • 107KB

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