Happy Holidays to everyone! Hanks Holiday Handout went off without a hitch and we had a total of 72 entries! So thank you all for contributing to it and I’m happy to set up another one when the opportunity arises!
The winners each received an email stating they’d won in their inbox; so check your email, as you MAY have an extra Christmas Surprise in it this year! 🙂 Congratulations to everyone that won, I hope you enjoy the gifts. I’ll shoot them off first thing tomorrow morning.
I hope you all have the best of holiday seasons and here are a few year end financial tips:
1. Consider selling your unsuccessful investments. If you’ve got some stocks or mutual fund shares that are flailing, think about dumping them. This is an extremely helpful tax strategy – You can use those losses to offset any realized capital gains you have this year, plus up to $3,000 in ordinary income. After that, your losses can be carried over to next year. We’ll often hang onto to losing investments with the hope to SOMEDAY they’re going to break even or come back from the depths when a better strategy is just to sell at a loss and put that money elsewhere!
2. See if you can prepay some deductible expenses. This can be a smart tax move. You could, for example, prepay your January mortgage payment. Send it in in before end of year rather than wait till next month. By doing that, you will have made 13 payments this year, meaning you get a bigger deduction on your mortgage interest. Use this if you think you’ll be in the same tax bracket (or lower bracket) next year.
3. Bump up the retirement contributions! You could also try to reduce your taxable income by bumping these contributions up. The more we put into your retirement account, the smaller your tax bill is going to be! If you’re less than 50, max out the IRA best you can to $4,000, and $5,000 if you’re over 50 (although you have until April to do this with most IRAs). Ask your tax professional on your specific situation.
If you have a 401(k) or 403(b) you’ve got a limit of 15k to put in there before end of year also, contributing to that will also lower your MAGI score, possibly fitting you in below the ROTH IRA phase out range.
4. Give your credit report a checkup if you haven’t. You get a free report each year that doesn’t hurt your that credit score. Get a free online copy of your credit report at: www.annualcreditreport.com. Check the accuracy of the report and follow up on any errors. If you have blemished credit, work towards achieving an “A” credit rating. Great credit can qualify you for better interest rates and terms on things you choose to buy next year.
5. Watch your mutual fund purchases carefully this time of year. It’s usually in November or December that mutual funds issue their annual tax bills to shareholders – if they have one at all. If you buy in before that distribution is made, you’ll be stuck paying that tax bill, even though you weren’t around to enjoy the gains. So before you buy into a fund, call up the fund family to see if it will have a distribution this year. If it will, wait until after it’s been issued to buy.