End of year to-do list

End of year to-do list

The end of the year is a time of celebration with Christmas and New Years. You may have your to-do list like shopping for presents, buying holiday meals, getting ready for get togethers, and so on. Don’t forget the other end of year to-do list that involve your financials.

Before the year is over, there are some things that has to be done and can’t be done in the new year. For example, if you wanted to do a Roth conversion, it can’t be done after the New Year. It has to be completed during the year. Depending on how busy your brokerage is, it may take days sometimes weeks to get it processed.

Other things I tend to think about at the end of the year are

  • How much 401K should I contribute next year?

401K contribution limits for 2023 increased to $22,500 up from $20,500. You may need to modify your contributions per pay check. My changes take effect after 2 pay periods so I already made my changes. If you are doing a traditional 401K and Roth 401K, you’ll need to figure out how much you want to contribute to each.

  • How much health benefits do I need?

I have a flexible spending account FSA plan with my employer and I need to decide how much to opt in for. My FSA allows a certain amount to be rolled over to next year so I need to calculate how much I to opt in for the following year.

  • Last minute contributions?

529 contributions typically need to be done by the end of the year which could help you with state tax breaks. If you don’t have a 529 plan, no problem. You can contribute to a family member’s or any other’s 529 plan which could qualify for tax benefits.

IRA contributions typically doesn’t have to be done by the end of the year and you have until tax day to make IRA contributions for the previous year. However, it’s something to have on your list especially if you haven’t reached the contribution limit.

  • Last minute donations

If you have anything in your house that you don’t need and would like to donate it to a local charity, do it before the end of the year. You should receive a receipt of your donations and you can claim it on your tax filing.

Other donations such as monetary donations have to be done before the end of the year. Examples could be to a charity, a church, or other qualified organization. Just make sure you have a receipt.

  • Estimated tax payments

Do you know if you paid enough federal taxes throughout the year? If you feel you need to make an estimated tax payment, you have till January 17, 2023 for this year. Last year, I did not pay enough taxes throughout the year and the IRS sent me a bill that included interest.

  • Are your federal and state tax exemptions appropriate?

I try my best when I file my taxes not to owe the government money or the government owing me money from pay too much taxes. I adjust my exemptions occasionally and this year I adjusted it a lot.  This year I purchased a hybrid car that qualified for the federal tax credit. With this credit I adjusted my tax liability so that I owed the federal government at least $7500 which is the tax credit amount. Instead of taking enough taxes out, I changed my exemptions so that less taxes were taken out throughout the year. With a new year coming, I need to change my exemptions back.

The end of the year shouldn’t feel like a burden but there are financial decisions to be made. Create an end of year to do list that includes your financial decisions that need to be made before the end of the year. If you are interested in following my journey, email subscribe to get alerts of latest posts or follow me on FacebookInstagram, and Pinterest.

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