The end of the year is coming up fast, and those last weeks of the year are full of the hustle and bustle of the holiday season. But there are a series of important items you should add to your to-do list before we say goodbye to this year and prepare for the next:
1. Review the state of your finances
Think about your expenses this year. Did you meet your financial goals? Or did you need to hold off on some purchases? Take an honest look at the current state of your finances to develop ways to reach your financial goals in the coming year.
2. Re-evaluate your retirement and health savings benefits
It’s important to save for retirement, especially if you are over 50. Your retirement and health accounts offer valuable tax benefits over time.
- 401Ks have a maximum contribution limit of $22,500 (with an extra $7,500 if you’re over 50)
- IRS contribution limits are $6,500 (with an added $1,000 if you are over 50)
- Health Savings Accounts (HSA) can go up to $3,850 for an individual, $7,750 for a family, with an extra $1,000 added to those limits if you are over 50
3. Assess your debt/credit cards usage
Go through your current debt and evaluate how you are utilizing your credit cards. You want to find credit cards with low interest rates and valuable rewards. And while eliminating all your debt may not be feasible right now, create a goal of reducing your debt as much as possible.
4. Gather your tax documents
Ensure you have an accurate accounting of all your financials before the end of the year. Keeping these records together will make it easier when you need to prepare to file your taxes. Also make notes if you had any major life changes, such as marriages, births, or retirement, so that you don’t miss out on any tax benefits.
5. Document all charitable contributions
Charitable donations are a great way to give back to the community, especially during the holiday season. Whether you’ve made donations throughout the year or waited for a year-end gift, make sure to keep records of the donations for tax purposes.
6. Create an annual budget
Once you’ve evaluated your income and expenses for this year, think about how you’d like to manage your budget for the coming year. Strategize your spending and find creative ways to increase earnings.
Checking these items off your list will enable you to end the year with accurate and up-to-date financial records, and help you get ready for the challenges of the new year.
We appreciate you reading our blog posts, and will continue to publish articles that will help you understand various issues in the tax world.
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