Year-end Financial To-do List

Posted by Creekmur Wealth Advisors on 9:00 AM on October 26, 2020

We're quickly approaching the end of another year - for many it can't come soon enough! But, before you start on your holiday to-do list, you might want to check out this "Financial To-Do List." Experience tells us that those who run through these items annually are well set up to reach financial goals in the new year!

Keep in mind this article is for informational purposes only and is not a replacement for real-life advice. Please consult your tax, legal, and financial professionals before modifying your tax or investment strategy.

Could you ramp up retirement plan contributions? Contributions to your retirement plans may lower your annual gross income. If you lower your gross income enough, you might be able to qualify for other tax credits or breaks available to those under certain income limits.1

Review your account balances now. There's still time to increase contributions so that you take full advantage of the maximum contribution amounts.2

If you don't currently make monthly contributions to your IRA or Roth IRA contact your investment professional's office to set that up. Having a scheduled investment plan helps with budgeting and ensures that you contribute the full amount possible each year.

Do you need to adjust your W4 withholdings?  You may want to make an adjustment if any of the following apply to you:

* You tend to pay the federal or state government at the end of each year.

* You tend to get a federal tax refund each year. 

* You recently married or divorced.

* You have a new job, and your earnings have been adjusted. 

Remember these are general guidelines, please consult your tax professional for specific advice appropriate for your situation.

Is it time to get your files in order?  This is the time to set up a filing system. Before you know it year-end documents will start rolling into your mail box. Designate a spot now where all of those papers should be collected while you prepare to meet with your tax preparer. If you plan to itemize your deductions start gathering the necessary receipts and documentation.1

Have you made your annual gifts to charity?  December 31st is the deadline for giving to non-profit organizations and qualified charities. If you have highly appreciated stock in your investment account, you may want to consider gifting stock rather than cash. This would allow you to avoid the capital gains taxes you would realize by liquidating the stock while benefiting a worthy organization.

For cash or stock donations, you can claim a deduction on your tax return, provided you follow the I.R.S. guidelines and itemize your deductions with Schedule A.

Has anything changed in your life this year?  Did you start a new job or leave a job behind? Did you retire? Did you get married, divorced, or start a family?  Major life changes could present unique financial and investment planning situations. If notable changes occurred in your personal or professional life, then you may want to schedule a full review of your finances -preferably by November 30 to give time to implement any changes needed. 

1https://www.irs.gov/credits-and-deductions 

2 https://www.investopedia.com/retirement/ira-contribution-limits/

3 https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions

  

Topics: Financial Planning

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