End of Year Planning
As we approach the end of the calendar year, there are a number of issues that you need to be especially attentive to so that you ensure that you start the New Year on a positive financial note. You really need to make sure that your tax situation, your 401(k) plan and your personal documentation is up to date and working for you.
Taxes are always a primary concern and should be. You should double check to see if your deductible expenses are maximized and examine how you might be able to defer some of your income until next year to save on this year's tax bill. By getting a head start on tax planning, you reduce the possibility of paying penalties and increase the likelihood that you'll be taking advantage of future tax savings.
Keep a close eye on your retirement planning, especially your 401(k). Make any adjustments necessary to improve your return percentages by rebalancing the holdings within the plan. You can normally accomplish this easily on the Internet. If you don't know which company controls your 401(k), just ask your human resources representative. It's always a great idea to rebalance your investments and watch your returns throughout the year to maximize your investment power by putting your money in funds that are showing the strongest performance. If you do this now and then, you will be surprised how fast your 401(k) money will grow.
This is the time of year when most of us make charitable contributions to help others who need help. We all have our preferred charities and remember that while these contributions are tax deductible, more importantly the primary desired effect is to make sure that those in need are helped during this special time of the year.
Documentation is an important consideration and must be checked often to ensure that all of your important papers are accurate and up to date. Check your will and your insurance coverage, and get together all important documentation that may have occurred during the year; things like marriage licenses, divorce papers, medical expenses or adoption records.
As always, you need to work with your tax professional to make sure that you are taking advantage of all of your options. Gather your records and take them to your accountant and remember to be thankful. Paying taxes means you made money this year and that's always a good thing.
Originally published in the Outspoken e-newsletter.