With only a few weeks left in 2017, it’ll soon be time to hang stockings, light Menorahs, and figure out your resolutions for New Year’s Eve.
However, if you want to try to reduce your tax liability for 2018, time is running out. The reason is, many important tax deductions such as charitable giving and retirement contributions must be in place by December 31, 2017. Furthermore, with tax reform afoot in Washington, you may not have the same deductions next year. Additionally, the end of the year is often a time for reflection and planning, so why not include your finances?
With that in mind, here are 5 money tips to help close out the year.
1.) Give like you mean it
It feels good to give. Additionally, it carries potential tax benefits. Now is the time to plan both cash and non-cash contributions to the charities of your choice. Ensure that each charity you support is recognized by the IRS, and keep receipts for all non-cash contributions – such as household items and office equipment. See our recent post on one simple (and unknown) trick that will increase your tax savings by more than 50% on your charitable contributions.
2.) When to take income and when to wait
Looking into various ways to accelerate or defer income or deductions is something to consider. Business owners may find it makes sense to prepay next year’s expenses now or delay invoices until the beginning of 2018. Employed individuals may want to ask employers to delay 2017 end-of-year bonuses, or use them to max out retirement plan contributions (especially if you aren’t taking full advantage of your company’s match).
3.) Your portfolio
As year-end approaches, take time to analyze your portfolio. Is it time to rebalance allocations? As part of that process, you may find underperforming stocks that you’d like to sell. It’s possible to reap tax benefits by disposing of those stocks and use the losses to offset capital gains you may have realized during the year. Consider speaking with a tax professional or investment advisor for guidance.
4.) Look back and assess
It’s easy to lose track of your spending the past year. So, take the time now to see where your money actually went. This will help you figure out how much you may need for the holidays, and also give you some insight so you can fine tune your spending for 2018. If you’re interested in an online budgeting and spending tracker, we like mint.com. It’s free and safe to use.
5.) Don’t forget non-financial goals
Forget finances for a minute — what do you want to accomplish in terms of personal ambitions in 2018? Maybe it’s the year to start a new job or a side business, or take a special vacation you’ve always dreamed of. Maybe you want to spend more time with family, or in the gym. Whatever it is, now is a good time to consider changing things up.
The end of the year always comes faster than we think. Go ahead and get started now while there’s a little time left. The effort you put in can help you roll into the holiday season with a little less worry, and a little more cheer.