The holiday season often brings thoughts of spending, but it’s also a crucial time for year-end financial planning. Jill On Money provides valuable insights into maximizing your savings and minimizing your tax burden before the year ends.
Implementing these strategies can significantly impact your financial well-being. Let’s explore Jill’s expert advice on essential year-end money moves.
Tax Planning with Jill on Money
Estimate Your Taxes: Utilize the IRS Withholding Estimator to determine if your current withholdings align with your projected tax liability. If you anticipate a shortfall, adjust your withholdings through your payroll department to avoid penalties. Self-employed individuals should consider estimated tax payments.
Maximize Retirement Contributions: Boosting contributions to pre-tax retirement accounts like 401(k)s or Traditional IRAs before December 31st reduces your taxable income and enhances your retirement savings. Those with lower adjusted gross incomes (AGIs) might qualify for the Saver’s Credit, offering up to $2,000 for individuals and $4,000 for couples.
Health and Flexible Spending Accounts
Health Savings Accounts (HSAs): Maximize contributions to your HSA before the year-end deadline. The 2024 limit is $4,150 for individuals and $8,300 for families.
Flexible Spending Accounts (FSAs): Many FSA plans require you to use the funds by December 31st. Review your balance and spend remaining funds to avoid forfeiting them.
Required Minimum Distributions (RMDs) Guidance from Jill on Money
Understanding RMDs: If you’re 73 or older and have pre-tax retirement accounts, you must take Required Minimum Distributions (RMDs). Failure to comply incurs a hefty 50% penalty on the undistributed amount. The penalty reduces to 10-25% if rectified within two years. Consult Jill on Money’s resources for detailed RMD guidance. Roth IRAs are not subject to RMDs. If you have multiple Traditional IRAs, you can take one RMD based on the total value across all accounts.
Qualified Charitable Distributions (QCDs)
Strategic Giving with QCDs: Individuals 70½ or older can donate up to $105,000 ($210,000 for married couples) directly from their IRA to eligible charities. These Qualified Charitable Distributions (QCDs) are excluded from your taxable income. For those 73 and older, QCDs can satisfy RMD requirements.
Investment Rebalancing with Jill on Money
Rebalance Your Portfolio: Market fluctuations can disrupt your target asset allocation. Rebalance your portfolio by selling over-performing assets and buying under-performing ones to maintain your desired risk level. Rebalancing within retirement accounts avoids tax implications, but taxable brokerage accounts may incur taxes on gains.
Capital Gains and Losses
Offset Gains with Losses: In taxable investment accounts, strategically sell losing investments to offset gains from winning positions. You can deduct up to $3,000 in net losses against ordinary income. Losses exceeding $3,000 can be carried forward to future tax years.
By following these year-end financial planning tips from Jill on Money, you can navigate the complexities of taxes, retirement, and investments with greater confidence. Remember to consult with a qualified financial advisor for personalized advice tailored to your specific circumstances. For more insightful financial guidance, visit www.jillonmoney.com.
