End-of-year Money Moves
Before you even think about making a New Year’s resolution, make an end-ofyear financial to-do list, said Jonnelle Marte in The Washington Post. “December can be a good time to reassess saving strategies, get paperwork in order for your tax return, and make other preparations.” You can prepay some bills that may technically not be due until January to maximize tax breaks on your 2015 tax return. Parents with a child in college, for instance, can settle tuition fees in advance for the spring semester; homeowners can pay January’s mortgage bill. Charitable donations need to be made by Dec. 31 to be deductible on this year’s tax return, so get checks in the mail and ask organizations to deposit them sooner rather than later. And if you haven’t already spent all of the cash in your flexible spending account, which can go toward co-pays, new eyeglasses, and other medical expenses, “do that now.” Although some accounts give you until mid-March to spend down the money, many don’t allow rollovers. If you have one of those FSAs, it’s use-it-or-lose-it time.
The end of the year provides many other opportunities to save money, “particularly on taxes,” said Trent Hamm in USNews .com. If you haven’t yet hit the annual contribution limit on your 401(k) retirement account—$18,000, or $24,000 if you’re age 50 or older—think about making extra payments now to lower your 2015 taxable income. Then consider topping off any 529 college savings plans. Most states offer tax deductions or credits on their own plans, even though 529s aren’t federally taxdeductible. You can also get a jump on your 2015 tax preparation, said Teresa Mears, also in USNews.com. Start gathering receipts and other paperwork and figure out where you are on payments so that your tax bill doesn’t come as a shock. “If things aren’t looking good, you still have time to increase your deductions before the year ends.”
“For those panicking as the year winds down, it is not too late to hire help,” said Beth Pinsker in Reuters.com. Many financial advisers are busy now and won’t meet new clients until January, but some will squeeze in an appointment during the end-of-year rush. You might want to seek expert help if you’re considering tax-loss harvesting: dumping losing shares to lower your capital gains bill. You can take a loss of up to $3,000 per year by getting underperforming stocks off your books. Web-based “roboadvisers” like Wealthfront and Betterment also do year-round tax-loss harvesting for low fees. Finally, give your portfolio a checkup, said Michael Pollock in The Wall Street Journal. “The stock market has sputtered and shuddered like it hasn’t in a long time,” throwing off most investors’ ideal mix of stocks and bonds. “Rebalance—now, not later.”
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