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4 end of year tax tips to save money

4 End-of-Year Money Moves That Can Benefit Your Taxes



December is the time of year to reflect on your personal and professional goals of the past 12 months, and make resolutions. But don’t forget to look ahead financially. The actions you take in the next couple of weeks can save you a good chunk of change in 2017. Consider these four money moves before you ring in the new year.

1. Flex those spending muscles

If you have a Flexible Spending Account (FSA) with a savings stockpile, you could very well be facing a “use it or lose it” situation. Find out if you’re entitled to a grace period or a carry-over of up to $500 (you’ll get one option or the other, but not both). Act quickly so you benefit as much of it as possible.

Do this:

  • Refill prescriptions early (if possible), get your family flu shots, and get your annual check up if it’s time.
  • Get an eye or dental exam if you’re due. And, if you’ve been considering acupuncture or a chiropractic treatment, now’s the time.
  • Make a note of any surpluses so you can adjust your 2017 contributions during the next open enrollment period.
  • 2. Top off your 401(k)

    How much have you contributed to your employer-based retirement account this year? If you’re under age 50, you can contribute a maximum of $18,000; those over 50 can contribute an additional $6,000. Remember, whatever amount you put into your 401(k) will reduce your taxable income, meaning that’s less you’ll owe Uncle Sam.

    Do this:

  • Play catch up with as big of a contribution as you can manage. If your employer offers matching contributions, take full advantage.
  • Related: Your One-Minute End-of-Year Debt Payoff Checklist

    3. Think like Trump.

    Don’t worry, this has nothing to do with politics, but many pundits predict that the president-elect and the Republican Congress will cut income taxes next year. That would mean both lower tax rates and higher standard deductions on 2017 returns, depending on the size of your household and some other factors. Maneuvering now to defer income to next year and accelerate deductions for this year can save you some bucks.

    Do this:

  • Be generous to your favorite charities before January 1. If the standard deduction is raised next year, giving to charity might not have as much of a tax benefit in 2017.
  • If a bonus or commission check is coming your way, ask if your employer can defer it until the new year.
  • If you typically itemize deductions, you might be able to deduct state and local income tax payments on your return. Talk to your tax pro about making an estimated payment before the ball drops and other details.
  • 4. Cut your losses

    To better put it into investment terms, harvest your losses. There’s no telling what will happen to capital gain tax rates in the coming year, which is why it’s best to focus on the present. Take any unrealized capital losses to offset capital gains; up to $3,000 in losses can be applied to reduce ordinary income. This tactic only applies to taxable accounts, so it won’t work for IRA or 401(k) investments.

    Do this:

  • Sell any investments you’ve held for 30+ days that are worth less than you paid for them to take a capital loss. (Just don’t buy them back until after 30 days from your sale date, or the IRS won’t allow the deduction.)
  • Read Next: Your Seven-Step Game Plan to Reach Your First Half-Million

    Remember, everyone’s financial and tax situation is unique, so consult with your tax advisor before you make any of these year-end money moves. Cheers to a financially rewarding new year!

    Any questions? Ask them here, or provide your own year-end tips.

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    The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
    The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory services offered through `SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA /SIPC .


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