Last-Minute Personal Finance Tips

It’s easy to get caught up in the holiday surge of attending concerts, shopping, cooking and planning outings with family and friends.  So much to do, all before the new year begins.

Not to add more to your already packed plate, but the end of the year is an important deadline to save on taxes and make other smart money moves.  

So, put down that spiked eggnog, put on some soothing seasonal songs and take some time to review your personal finances.

Speaking of Gift-Giving…

This is the time of year when many of us like to be generous givers, especially with family members and our favorite charities.  

But there are yearly limits to keep in mind, explains Forbes reporter Deborah Jacobs:

“The simplest way to subsidize others is by using the annual exclusion, which allows you to give $14,000 in cash or other assets each year to each of as many individuals as you want. Spouses can combine their annual exclusions to give $28,000 to any person tax-free – a process called gift-splitting.

Feeling very generous? Write two checks: one before December 31 for $14,000, and the other on January 1 for $14,000, giving the recipient a full year’s worth of potential investment growth on the second gift.”

Charitable giving can reduce your tax bill if you itemize your taxes. Knowing that a tax savings opportunity looms might be an incentive to be a little more generous this year. But if your donation is non-cash and valued over $250, you will need a receipt from the charity that includes a description of the item and other details.

And remember, donations for the current tax year must be made by Dec. 31. Consumer Reports explains the rules when giving is “down to the wire.” Here are some tips:

• If you’re mailing a check, the postmark on the envelope must be before midnight Dec. 31.  “For proof, though, don't just drop your envelope in the mailbox; it might not get postmarked until Jan. 2. Send it registered or certified mail. Keep the receipt and a copy of your canceled check for your file,” Consumer Reports says.
• If you’re paying by credit card, it must appear on your statement as a December charge. (So don’t make the mistake of paying by credit card, then putting the form in the mail on Dec. 31).
• If you’re paying by text using a code from a charity, the charge must show up on your cell phone bill before Jan. 1.

Better yet, don’t wait until the last minute.

Ponder 2017, Plan for 2018

Even though a major tax overhaul may change the rules for next year, this is still a good time to both look back and gaze forward, and make any last-minute adjustments to your personal finances.

Financial writer Mark Avallone lists 10 year-end tips. Here are 5 of them:

1. If your goal for yearly savings is off target, look for “painless” ways to save money. One of the easiest ways is to contact merchants, such as cable, telecommunications and trash removal, and ask if there is a cheaper package or special available. You’ll be surprised how often they say “yes.”
2. If you are not on track to maximize your 401k and IRA contributions, see if you can make a deposit to take advantage of tax deductions.
3. If you have a Flexible Savings Account (FSA), check your unspent balance because some funds have a “use it or lose it” feature.

1. Review insurance plans. “Each year we are told to check our smoke alarms when daylight saving time ends. That may also be a good time to review home and auto insurance to see if the coverage you have makes sense. Make sure the amount of replacement value on your home includes any recent increase in value. Also look at changing your deductibles as a way to possibly save some money,” he writes.
2. While many life-changing events are unplanned, others are mapped out or in the works. Do you plan to move, reduce your working schedule, undergo non-emergency surgery or embark on a major trip?

A Few Other Financial Issues to Consider

If you’re over 70 ½ years old (or inherited a tax-deferred retirement account from someone who was), make sure you withdraw the Required Minimum Distribution to avoid a tax penalty.

If you’re self-employed, paying estimated quarterly taxes in December may give you an extra deduction.

If you have met your medical deductibles for the year, you might want to buy those new glasses or take care of some dental work.  

You may think you have no extra time this month for money matters, but find time to meet with your financial advisor before the year ends to help you sort through 2017 and plan for the year ahead. Think of it as a gift to yourself.

Planning for the Future

Looking beyond 2018, do you have a plan for your financial future? Having a plan in place is key to enjoying your retirement. Find out how Kendal at Oberlin can be a partner in your enriching, financially-sound future by calling us at 800-548-9469 or 440-775-0094, or contacting us online.

In the past, Molly Kavanaugh frequently wrote about Kendal at Oberlin for the Cleveland Plain Dealer, where she was a reporter for 16 years. Now we are happy to have her writing for the Kendal at Oberlin Community.