By Stephen Kyne
As the year winds down, it is important for us to take a moment to review our financial position and see if there are any steps we can take to capitalize on what’s happened during the year, while proactively setting ourselves up for success in 2018.
Here’s a quick checklist:
1. Pay your school taxes early. In light of the current tax legislation making its way through Congress, it’s important to note the proposed changes in State and Local Tax (SALT) deductions. Since we live in a high-tax state, this is of concern because the current proposals eliminate or significantly reduce SALT deductions.
Talk to your tax accountant to determine if it may be to your advantage to pay the second installment of your school taxes in 2017, rather than waiting for them to be due in early 2018. This could allow you to claim the deduction while it still exists, rather than forego the opportunity.
2. Tax-loss harvesting. The S&P is up nearly 20 percent in 2017, so you may have recognized some capital gains in your non-retirement accounts. In order to offset those gains, thereby reducing your tax liability, be sure to talk to your financial advisor to determine if there are any losses you could recognize before the calendar year runs out.
3. Take your Required Minimum Distributions (RMDs). If you’re at or over the age of 70 ½ , the government requires that you withdraw a certain percentage of your IRAs and other tax deferred accounts, depending on your age, and pay taxes on the withdrawal. The penalty for not taking the required amount is 50 percent of the amount you didn’t take, so talk to your tax accountant and financial advisor to be sure you’ve met this important requirement.
4. Review your beneficiaries. During the year our families shrink and grow. The end of the year is a perfect time to review your beneficiary declarations to ensure they still accurately reflect your desires. Since accounts with beneficiary declarations bypass probate, any mistakes you make may not be contestable after your passing.
5. Contribute to your retirement accounts. Have you maximized your retirement plan contributions? As company-sponsored pensions continue to decline in popularity, the burden of saving falls more and more on you as an individual. If you find yourself with extra cash on-hand as the year closes, consider topping off your retirement plan contributions to take advantage of contribution limits and any possible tax deductions that may be available.
6. Give to Charity. Consider increasing your gifts to charity. Giving to charity could be tax deductible.