Anyway, now is the time to start making some end of the year plans, especially when it comes to your finances. What you do over the next two months can have a big impact on your taxes, as well as other parts of your financial life. Here are some simple things that you should check now, so that you can make sure you’re prepared for the end of 2012.
Check Your Investing Accounts
A lot of your investments will require attention over the month, especially when it comes to specialty accounts.
First, if you’re still saving money for the future, see if you can hit the max for your retirement accounts:
- Maximum 401k Contribution: $19,500
- Maximum IRA Contribution: $6,000
Plus, if you’re over 50, you can have additional catch-up contributions:
- 401k Catch-Up Contribution: $6,500
- IRA Catch-Up Contribution: $1,000
Finally, if you have a 401k or Traditional IRA and are turning 70 1/2 this year, you will need to take your required minimum distribution (RMD). Remember, if you don’t take this distribution, the amount you were supposed to take will be taxed at a staggering 50%!
Flexible Spending Accounts
With just a few days left until the end of the year, have you used all your tax free money yet? Remember, if you don’t spend what’s in your flexible spending account (FSA), you lose it. So, if you haven’t checked your balance lately, make sure you check it out and see if you have any money left to spend.
However, some plans do allow you to carry over up to $500 – but it does vary by plan and company, so make sure you check before you lose it!
Finally, if you’ve been putting off cleaning out your closet or getting ready for fall, now is a great time. You need to make sure that you get all your donations to charity in before the end of the year so that you can have a tax write-off this year, instead of next year. Congress always has a nack for passing a bunch of last minute rules, so you never know what’s going to happen (and how your tax return might be delayed) – best take advantage of it now if you’re just going to donate it anyway.
What other tasks do you need to do financially before the end of the year?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.