Year-End Tips to Improve Your Tax and Financial Situation
The end of the year is fast approaching, and it’s a great time to take a look at your finances to help improve your tax and financial situation. As a career and businesswoman, it is important to be aware of your financial status and to monitor your accounts on a regular basis. Improve your tax and financial status with these tips.
Increase Your Retirement Plan Contributions
If you want to secure your days after retirement, then you’ve got to add to the amount you remit to your 401(k) plan. By doing that, you’ll decrease your taxable income while at the same time increasing the amount you save for retirement before the year ends.
Employers often offer a matching incentive which is essentially ‘free money.’ Make sure you are taking advantage of any matching program that your employer offers.
Offset Gains By Selling Losing Stocks
You will need to pay taxes on any stock trade that results in a gain. However, you can reduce the taxes by selling stocks that are in a losing position. The IRS offers guidelines for writing off losses against gains. To receive the maximum tax savings, organize your sales so that they will apply to the types of gains that you have. IRS limits your deduction to $3,000 of capital losses per year but you can carry forward losses to the next year.
Check Flexible Savings Account (FSA)
Confirm if you have an unspent balance on your FSA plan. Most of these plans have a ‘use it’ or ‘lose it’ feature. If you have been putting off that visit to the doctor or need a new pair of glasses, this is a great time to take action. You can take advantage of the pre-tax dollars in your FSA before 2017 ends – the eligibility period for expenses will sometimes roll into the follow year. Check with your plan administrator for your specific plan requirements. By using these funds to pay for eligible medical expenses, you are using pre-tax dollars and therefore reducing your overall tax liability.
Give to Charity Before the Year Ends
Before the year 2017 ends, consider giving back to charities and other nonprofit organizations. It’s a rewarding experience that helps fulfill your charitable desires and bring an impact on the society. If you have itemized deductions, contributions to charities and organizations are deductible on your tax return.
As such, make sure that you keep track of all the gifts. If you have stocks in a winning position, you can donate the stock and get the deduction for the value of the stock while also avoiding capital gains.
Fix Credit Report Errors and Omissions
Now is a great time to review your credit report for any errors or omissions. Credit report mistakes are not uncommon and can lead to plenty of problems, including disqualification for mortgages and loans, and increased insurance premiums and interest rates. Some mistakes can even prevent you from getting a job. You can also check your credit health using this report and start taking actions to improve your credit score.
Check Your Insurance Policy
An important element of any sound financial plan is holding adequate insurance. Whether it’s homeowners, auto, or life insurance, you’re protected from any unforeseen risks. Check all of your policies for adequate coverage and confirm the information for any beneficiaries listed on your policies.
Contribute to a 529 Account
Safeguard the future of your beloved children or grandchildren by contributing to the 529 College Savings Plan. In the US, 33 states offer a full or partial tax reduction or credit when you make contributions to the plan. Also, when the money from this account is used for eligible expenses, you can qualify for tax-free withdrawals on any earnings.
Pre-Pay Expenses Before Year-End
If you’re a business owner, you can reduce your 2017 income by clearing some 2018 expenses in advance. For instance, if you pay monthly subscriptions for the software used in the office, you can make annual subscriptions. The odds are high that some of the companies you work with offer discounts on yearly payments compared to monthly subscriptions which will result in a savings for your company. You can also consider paying office rent and utilities, accounting and bookkeeping telephone marketing materials and advertising, memberships, bookkeeping other expenses expected next year. It’s important to have a strong financial plan that will help you secure the financial health of your business.
Plan for 2018
From the look of things, the tax system may get partly overhauled shortly. As such, it makes sense to organize a meeting with your advisors so you can know what changes to make to your plan. Whether you are a professional employee or a business owner, it is important to have a financial plan in place.