Last month we discussed moves you should make regarding your health savings account before year-end, but there are numerous financial benchmarks you should consider come December to set yourself up for a financially beneficial tax season. This is especially true if you have some liquid funds sitting around. Here are a few tips the experts agree on:
Those forward-looking accounts? Max them out.
Put in the maximum yearly pretax amount your retirement accounts allow, whether you have an IRA, 401(k) or a combination of those. This will reduce your tax profile and reward you later. The same goes for health savings accounts and 529 college fund accounts. The more pretax money you can shovel away before year’s end, the smaller your adjusted gross income will be when April 15 rolls around.
2017 will have emergencies, too.
Did your emergency funds take a hit in 2016? Try to replace all that money before 2017 rolls in. The new year is an artificial deadline for this tactic, but it never hurts to keep a set amount of fluid cash around, just in case.
Go to the doctor, by way of the dentist’s office.
If you’re covered for a certain number of doctor visits or dental cleanings a year, take advantage of them by calling for an appointment now. If you’ve met your deductible or are close to meeting it, see if you can schedule a procedure you’ve been putting off. If you put it off until 2017, you’ll be starting all over to meet that deductible and paying out of pocket if a health issue worsens.
If you have a flexible spending account tied to your health insurance, use up every last penny in there, because FSAs are use-it-or-lose-it deals. Double-check what you can legally spend it on and head to the pharmacy and stock up on over-the-counter medicine if your plan allows for it. This is a good strategy for heading into the winter from a health and convenience perspective, too – no one enjoys the emergency run to CVS for NyQuil.
Pay January expenses now.
If you’d rather have a lower tax liability this year than next, look into whether you can prepay college tuition for the spring semester. The same goes for your January 2017 house loan – you might be able to write off that amount of interest paid for 2016 if your mortgage lender will accept a payment in advance.
Look even further into the future.
Before the end of the year, commit to reviewing your estate planning. If you’ve gotten married, or kids or even grandkids have entered the picture, you’ll probably want to make some changes. If you don’t have a trust or will, now is the time.
This same philosophy applies to life insurance beneficiaries. Re-evaluate whether you have enough insurance, and make sure it will go to the right people. If you don’t have legal guardians designated for your children in case something happens, get that taken care of, too.
Make room for all your Christmas loot.
You hear about spring cleaning, but fall cleaning is even better. Clear your home of items that you can donate – generally tax-deductible – and make room for those holiday gifts.
If none of these financial moves sound like they’ll put you in the holiday spirit, consider this: When your family is gathered around the table this holiday season, you won’t have any nagging worries to distract you from ringing in the new year with your loved ones.
Kat's Money Corner is posted on Dollars & Sense every Tuesday. Kat Hnatyshyn, when not blogging or caring for her little ones, is a manager with CommunityAmerica Credit Union. For more financial chatter, click http://twitter.com/savinmavens or visit http://communityamerica.com.