As we approach the end of the year, this is a good time to consider a few good money moves that will make a difference in your finances.
1. Check Your Tax Withholdings
Take a few moments and utilize a tax calculator to estimate your expected taxes for the year. With the changes to the tax code, individuals may be in for a surprise. The Internal Revenue Service (IRS) has a withholding calculator that can quickly estimate your expected tax liability. Using information from your last paycheck, projected profits from self-employment and rental activities, current deductions and much more, you can get a good idea of what you may owe or what you can expect to receive.
2. Zero out your spending accounts
Don’t forget that you have until December 31st to utilize your flexible spending accounts (FSAs). Flexible spending accounts allow individuals to save tax-free money for medical and dependent expenses.
In most cases, these accounts are known for their “use it or lose it” rule, which means you have until year-end to pay for qualified expenses. While there are some employers who may allow for a grace period or carryover, it is important to check.
3. Check your benefits
For many employers, this is open enrollment season. As such, this is a good time to check your benefits to determine whether you need to make changes or add benefits to your plan. Also, it is open enrollment for the Affordable Care Act until December 15th. Know that these changes can not only provide you with more benefits but also help you reduce your taxes in many instances.
4. Review your tax deductions
With the changes to the tax code, many people may not have a need to itemize. Keep in mind, the standard deduction has increased for all. But if you are still able to itemize, this may be a good time to pay certain expenses. This is a great time to contribute to your favorite charity. You could pay for professional licenses, dues, and other business-related expenses. Making these extra payments before year-end will allow you to accelerate deductions into the current year and reduce your tax bill. Speak with your tax professional to determine what are the best moves for your situation.
4. Get organized
Lastly, if you are simply all over the place, take this time to get organized. If you haven’t yet, check out my financial planner! Set aside thirty minutes or so, to simply take time to get a handle on your paperwork. Review and organize financial records, such as bank statements, insurance records, possible tax deductions, and receipts. Put a system together to help you get ready for the New Year!
Remember, your choice, your future!