Holiday Checklist
December 01, 2015

Dear Clients and Friends,

A little planning and taking all the deductions you can means more money in your pocket. This may seem like an onerous list, but you should be able to work through these items quickly, and the results will be well worth it.

Your Year-end Financial Checklist

Here is a year-end financial checklist you should work through before Dec. 31.

  • Tax-planning (tax-loss/gain harvesting through accelerating/deferring income and deductions). This action enables you to often lower your tax bill and even your tax rate by loading up on deductions before year end. This includes out-of-pocket medical costs, making charitable gifts for 2014 before year end and making an additional mortgage payment to name a few. Contact us or your accountant for a more comprehensive list.
  • 529 contributions to college savings accounts for children or grandchildren. Your contribution is eligible for a state tax deduction. That’s a 5 percent tax break bonus on contributions up to $10,000 per parent or $20,000 if the parents file a joint tax return.
  • Estate-related gifting. You and your spouse can gift up to $14,000 each or $28,000 per child this year where the gift is not subject to gift taxes.  
  • Charitable contributions. Contributions to charitable organizations may be fully deductible to 50 percent of your adjusted gross income.  What you don’t use in one year can be carried over.
  • Roth IRA conversions. If you expect to be in a lower tax bracket this year than in retirement or future years, you may want to convert part or all of your traditional IRA to a Roth, and pay the lower tax rate now.
  • Beneficiary information on all your accounts. If you have had your estate plan updated, gotten married, divorced or have had children, this is a good time to revisit your accounts.
  • 401(k) retirement plan salary deferrals. Your contributions are tax deferred, so take advantage, and make sure you have taken all the deferrals that you are able.
  • 401(k)/PSP/qualified retirement plan creation. If you do not have a plan in place, and you are a business owner, you may want to set up a plan and contribute to defer taxes on income.
  • Required minimum distribution. If you are retired, be sure to verify you have taken your required minimum distribution from your IRA. If you are age 70½, you have to take this distribution.    
  • Health savings account (HSA). These health savings accounts are funded with pre-tax dollars for account holders to spend on medical costs not covered under your health plan. The only problem is that if you don’t use the funds, you will lose them.  Depending on your employer’s program, the chance to use the funds may expire Dec. 31, 2014.
Just implementing a few of these strategies can potentially keep a significant amount of your money from being subject to taxes.

Have a wonderful holiday, and please let us know if we may be of help.

What Bruce Rauner’s Win Means for You.

Susan Templeton

December 2015