As we wind down 2018, you’re probably busy with the usual holiday events and preparations. I’ve got a few more items for your to-do list that won’t take long, but will help you feel more financially organized when you prepare for the new year.
Prepare for the New Year – 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 2018 are $18,500 for a 401(k) and $5,500 for an IRA.
Are you a freelancer or consultant? You have until the end of the year to set up a simplified employee pension individual retirement arrangement (SEP IRA, for short.)
–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.
–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.
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 new tax laws and making donations here.
Make Business Purchases
If you run your own business, this is a good time to make any last minute tax-deductible purchases. Just be careful if your income is near $315,000 for a married couple or $157,500 if you’re filing a single return. Eligible business owners can get up a 20 percent deduction of qualified business income (QBI,) but once your income hits those limits, the deduction becomes more limited.
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.
Review Your Year
Take a look back at 2018. What mistakes did you make? Did you hit your financial goals? What pitfalls did you encounter? Taking the time to review what did and did not work will help you avoid repeating the same mistakes or missing the same opportunities next year.
Set Your Goals
Even if you don’t plan on setting resolutions, take some time to think about your major money goals for 2019. What big expenses do you know are coming up? What are some tasks you hope to tackle that you haven’t gotten around to? Will you be investing in anything new?
This can be a very rough list of ideas for the year ahead, but it will help you think long-term so you can make smarter decisions when you prepare for the new year. Go a step further and break these steps down into quarterly or monthly goals or tasks, and you’ll be ahead of the game on January 1st.
Do you need help preparing for retirement? 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.