Year End Planning Advice

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By Jacob Maslow

The end of the year is upon us, and it’s important to finish some last-minute financial plans going into 2016. As the year winds down, you only have a small window of opportunity to act before 2016 is underway.

There are few things you need to do before Friday, and these include:

Make Contributions and Distributions

Tax deductible items, such as charitable giving and gifting, have deadlines at the end of the year. You want to maximize these as much as possible, and you could also maximize college savings 529 plans.

IRA accounts can have their contributions maximized, but this can wait until April 15, and that is the deadline for maxing out your IRA.

Anyone that is over the age of 70 ½ will need to take out the required minimum distributions from their IRA. If you do not to get these distributions before the new year, you will be penalized by the IRS.

Analyze Your Gains and Losses

Tax losses need to be harvested and off of your books before the end of the year. You are able to write off a loss of up to $3,000 per year, but this needs to be done before December 31. Utilizing a financial advisor is best at this time, and if you cannot afford a financial advisor, there are other web-based services that will allow you to maximize your gains and losses for the year.

You don’t want to get back to your financial advisor too late, and at the time of reading this article, it is likely too late to get a lot done to maximize your gains and losses.

Your best bet is to contact your financial advisor and discuss your options at this time. You want to offset capital gains with tax loss selling as much as possible.

Update Your Financial Plan

You want to make sure that you are on the right track financially. You want to review your:

  • Estate planning
  • Insurance premiums
  • Stock portfolio

If you’re planning on refinancing a house, sit down and look over your options at this time. It’s best to start the new year on the right financial track to propel your gains in 2016.

You also want to begin structuring your giving for the year. You’re allowed to give up to $14,000 to individuals without these gifts counting towards the lifetime exemption of $5 million. Many people choose to offer gift cards to clients as a way to provide gifts and lower tax burdens.

Donations are a great way to lower your tax burden, and you have the option of donating appreciated stock if you do have capital gains as a way to lower your tax burden. At the end of the year, it’s always a good idea to overlook your financial planning and start the new year on the right track.

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