Ask yourself these 5 questions and then take action!
Question #1
What has changed for you in 2016?
Did you start a new job or leave a job behind? Did you retire? Did you start a family? If notable changes occurred in your personal or professional life, then you will want to review your finances before this year ends and the new year begins. Even if this year has been relatively uneventful, the end of the year is still a good time to get cracking and see where you can plan to save some taxes and/or build a little more wealth.
Question #2
Do You Practice Tax-Loss Harvesting?
Tax-loss harvesting is the art of taking capital losses (selling securities worth less than what you first paid for them) to offset your short-term capital gains. If you fall into one of the upper tax brackets, you might want to consider this move, which directly lowers your taxable income. Keep in mind this strategy should be made with the guidance of a financial professional you trust.(1)
Question #3
Do You Itemize Deductions?
If you do itemize deductions, great! Now would be a good time to get the receipts and assorted paperwork together. Besides a possible mortgage interest deduction, you might be able to take a state sales tax deduction, a student loan interest deduction, a military-related deduction, a deduction for the amount of estate tax paid on inherited IRA assets, an energy-saving deduction. There are so many deductions you can potentially claim, now is the time to meet with your tax professional to strategize to claim as many as you can.
Question #4
Are You Thinking of Gifting?
How about donating to a charity or some other kind of 501(c)(3) non-profit organization before 2016 ends? In most cases, these gifts are partly tax-deductible. Keep in mind, you must itemize deductions using Schedule A to claim a deduction for a charitable gift.(2)
Question #5
What Can You Do Before You Ring in The New Year?
Talk with a financial or tax professional now rather than in February or March. Little year-end moves might help you improve your short-term and long-term financial situation.
Sources:
- fool.com/retirement/2016/11/09/1-smart-tax-move-to-make-before-the-end-of-2016.aspx
- irs.gov/taxtopics/tc506.html
- This material was prepared, in part, by MarketingPro, Inc.
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