The end of the year can be stressful for many people. Not only are calendars packed with holiday festivities and travel, but there are also all of the end-of-the-year financial preparations to take care of.
This guide should help give you a clear view of what needs to get done and when. Hopefully it’ll make ringing in the New Year a bit less stressful:
New Year Financial Preparations – Know Your Deadlines
You still have time to save on your tax bill. Here are some tasks you can complete by December 31st that will help you out when you pay your tax bill by April 15th:
–Max out retirement accounts. You have until 12/31 to contribute to a 401(k). If you’ve got an IRA, you have until you file your tax return to make contributions. Contribution limits for 2019 are $19,000 for a 401(k) and $6,000 for an IRA. See this post for a full list of when to make contributions to your retirement plans.
–Convert to a Roth. You have until 12/31 to convert your traditional IRA to a Roth IRA. Why make the switch? A Roth IRA gives you the benefit of not having to pay income tax when you withdraw money for your retirement.
–Decrease your capital gains. If you have investments with large capital gains, this is a good time to defer them or harvest some of your losses.
–Make a charitable donation. You can deduct the donations you make through the end of the year on your taxes. The charity you give to must fit the tax code, which would include entities like nonprofits, religious groups, not-for-profit schools and public parks. If you have to take required minimum distributions this year, then make a qualified charitable donation. RMD’s can go directly to charity to avoid any taxes.
Another note about charitable donations: You might want to make your contribution every other year and double up on your donations when you do make them. That’s because the standard deduction has changed, and you might not get the same tax break as you did in previous years. Read more about the tax laws and making donations here.
Prepare Your Portfolio
Like I mentioned in the most recent quarterly update, signs point to a potential recession looming in 2020.
Look Over Estate Plans
It’s important to take time every year to make sure your estate plan is up to date. This is especially true if you’ve gone through major life changes, like marriage, divorce or the birth of a child. Don’t forget to review the beneficiary information, too.
Here is an Estate Planning Organizer to help you get everything set up the way you want it.
Plan the Year Ahead
Maybe you hit your financial goals this year, maybe you didn’t. Either way, reviewing the money moves you made this year is an excellent way to prepare for the year ahead.
Where did you set yourself up well, and where did you fall short? This information will give you a good insight into where you should be focusing your attention in 2020.
Here is a roundup of some of my blog posts from the past year that might help you as you’re reviewing your portfolio and thinking of your 2020 money goals and tasks:
- Important Deadlines to Know for Your Retirement Plan
- Managing Internal Capital Gains Exposure
- Medicare Taxes for High-Income Earners
- Social Security: When to Take Benefits if One Spouse Earns More
- Getting Up to Date with Your Estate Plan
- Accumulation Phase: Plan Your Retirement Allocations
- Approaching Retirement: Prepare Your Portfolio
- How to Avoid a High Tax Bill
- Why You Should Delay Taking Social Security
Do you need help getting your finances organized? Contact me today to set up a meeting to talk about your goals. You can also download my free ebook for physicians for tips and information about getting your finances on track.