Can you believe that there are only two months left in 2014? Where did the year go… It seems like just yesterday we were talking about taxes (oh, because we were talking about taxes – early filers…).
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: $17,500
- Maximum IRA Contribution: $5,500
Plus, if you’re over 50, you can have additional catch-up contributions:
- 401k Catch-Up Contribution: $5,500
- 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!
Charity Contributions
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 – 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?
Jason @ WSL says
I’d like to get all my ducks in a row for my taxes. I’m a little anal when it comes to being prepared and I don’t like rushing around at the last second. This will be the first year I won’t be doing taxes on my own and I have A TON of stuff that I’d like to have ready so we can file as quickly as possible.
Aram Durphy says
If you manage your own portfolio, this is a good time to check in on your realized capital gain for the year. If you have a gain, you may want to sell some losses to offset. If you have a loss, you might want to shed a few winners.
Robert says
Great tips on trying to minimize taxes. Would you sell just to avoid taxes, even if there isn’t a good fundamental reason to sell?
Aram Durphy says
Yes, I don’t mind selling a solid company for tax reasons. There are many other solid value opportunities on my stock buy list for reinvested capital. Also, if I really like the position, I can reenter once wash sale rules are met.
Jeff says
I would sell the losers if I had other capital gains. But not if I did not have realized gains. A capital loss it limited to $3,000 after it offsets gains. Not a huge tax savings.
Andy Hough says
I don’t have a 401k or flexible spending account and I don’t itemize so I can’t take advantage of charitable deductions. I plan to contribute at least a little to my IRA but I’m going to wait until next year for that. I want to see if the Saver’s credit or a deductible IRA will benefit me most.
Financial Samurai says
My main check list is to launch at least one new revenue project online and make sure my business expenses are squared away!
Robert says
Interesting to hear? Mind sharing your project?