Tis the season for settling in for the holidays as many begin looking forward to spending time with family and friends, kids coming home from college, travel planning, and festivities galore. Many lists are getting made as gift giving, meal preparation, and holiday budgeting come to the forefront on priority lists. The end of the year is a busy time that keeps us running a bit ragged through January 1 and managing financial records can easily take a back burner. Making an end of year tax list and checking it twice may be the key to staying on track and closing out the year on a high note. Don’t pout, don’t cry because here’s a list of what you can do to avoid the tax man blues.
Maximizing contributions to tax-advantaged retirement savings accounts up to the max by December 31st may reduce your taxable income. For 2017, the maximum you can contribute to a 401K is $18,000 dollars. If you are able to contribute to the max before the end of the year, the potential gain is a $4,500 dollar tax savings if you are in the 25% tax bracket. Generally, the money you contribute, along with what your money earns, is tax free until you withdraw it. The more you contribute now, the better your chances of reaching your retirement goals.
Financial planning and cash flow analysis are great ways to assess where you stand financially. Generally speaking, your personal “profit and loss” is the best way to tell if you have a balanced budget and what you may be expecting in the coming year. How much did you make? How much did you save? How much did you spend? Examine your family’s financial status for the year ahead if you are considering saving more for retirement, a college fund, or a new roof over your head. Cash flow, in and out, is the best way to tell how well you managed your money throughout the year and whether or not adjustments need to be made for future investments, savings, and budget planning.
Tis the season of giving?? Itemizing your taxes, charitable contributions and donations from a taxable account is a win/win proposition. Donating to charities entitles you to a qualifying tax deduction, but must be made by December 31st to be included in your tax return. For non-cash donations valued at over $250 dollars, you’ll need a receipt including item descriptions, date of donation, and address of the charity. For more specific details on charitable donations, please see IRS Topic Number 506 here: https://www.irs.gov/taxtopics/tc506
Simplifying your financial record keeping is always a good idea throughout the year, especially during the busy holiday season. Taking advantage of direct deposit and online bill paying makes it easier to organize and pay your bills on time, especially if you receive and pay all of your bills through your bank… one place, one list! The majority of banks and credit unions make it easier to bank electronically through an online bill pay feature allowing the bank to send payments for you. Although the initial set up isn’t quick and easy, once you set up bill providers, account numbers, payment frequencies, and due dates, bills get paid on time every time. The time and headaches saved are well worth it! No more late fees means more money in your bank! More money for extra gift giving! Less time spent worrying about it!
November 10, 2017
Randolph Business Resources, LLC.
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