Year-End Financial Checklist
Have you already started thinking about the financial goals you want to set for the New Year?
Well, hold on. First, try taking care of some financial business before 2013 rolls out.
“Many people, rushing to make holiday plans, would like to take a vacation from thinking about money. Not so fast,” reports Deborah L. Jacobs for Forbes. “In the process you could whiz by some crucial financial deadlines on Dec. 31. Miss them and you might get hit with substantial penalties or lose the opportunity to take advantage of some smart money-saving moves.”
Here a few of the 12 smart money moves you should make before the end of 2013, according to Jacobs:
-- Catch up on contributions to your employer’s 401(k) plan. Okay, you probably want to use what money you have to buy holiday gifts. But try to trim some from your holiday budget to put into your retirement fund. This gift to yourself will last a lot longer. For 2013, you can contribute up to $17,500 to a 401(k) plan, or $23,000 if you’re 50 or older, Jacobs points out. If you’re self-employed you can set up a one-person 401(k). “So long as you create it by Dec. 31 you can make contributions for 2013 until the due date of your 1040 with extensions – as late as Oct. 15, 2014,” she says.
-- Give and you will receive. Of course, there is the opportunity for a tax deduction if you give to a charity. Keep in mind that charitable contributions must be made to qualified organizations and are deductible only if you itemize deductions. Payments to individuals are never deductible. Here’s an option if you’re 70½ or older and need to take a 2013 required minimum distribution from your IRA. Jacobs says consider transferring what you are required to withdraw or part of it directly to a charity. “You won’t get a charitable deduction, but you also won’t have to recognize this ‘charitable rollover’ as income, which has other benefits,” she writes.
-- Give a gift of a college education. Consider setting up a 529 plan for your child or a child in your family. It’s a gift they may not appreciate now but will when it comes time to pay for college. Funds put in a 529 plan can be used to cover college tuition and other qualified expenses. With this type of tax-advantaged plan, you don’t have to pay federal or income taxes on returns unless the cash is withdrawn for reasons unrelated to college. In addition, some states offer an income tax deduction.
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Source: Washington Post