Year End Planning
Another checklist?! It’s no surprise that tax checklists abound this time of year - the window to make an impact on your taxes for next year is quickly coming to a close.
What about everything else?
If any of these topics grab your attention, reach out to your tax advisor, financial planner or advisor or legal counsel. White River Investments addresses each of these throughout the year, but that shouldn’t stop you from doing a quick mental check and making note of anything that may need some attention!
COMPANY BENEFITS
It is about that time of year for open enrollment. This could be something good to discuss with your financial advisor to make sure you are getting the most from your benefits.
Flexible Spending Accounts – Do you have funds left in your FSA? (Different than a Health Savings Account - HSA) The deadline for using funds is typically December 31st, sometimes an employer will offer a grace period but this doesn’t always apply. Remember, if you don’t use it you lose it.
TAX
Consider harvesting gains & losses. Any losses you don’t use this year can carry forward, and with the market having a hard year, no reason not to get some benefit out of it!
Ask your financial advisor to send you a Gain / Loss report so you can be prepared for the taxes associated with those gains and potentially make a plan to cover them.
Did you sell your house and create gains this year? Even if you qualify for the capital gain exemption, you might still have some gains. Make sure you’re ready for that when April rolls around!
Make your charitable contributions. If you had a particularly good year for income, talk with your tax advisor and financial planner about making some strategic donations.
Be strategic about when you pay your property taxes. The IRS implemented a $10,000 per year maximum deduction, so if your state & local taxes are over that amount, consider options to hold off on paying them.
If you are self-employed, chat with your tax advisor to get an idea of what your SEP IRA, Solo 401(k) or other retirement plan might be funded with so you can be prepared with cash.
And of course, any good list is going to include - Check with your CPA before making these kinds of decisions. We do not give tax advice and you’re paying them for a reason!
FINANCIAL PLANNING
Have you reviewed your financial plan in the last 4-6 months? It’s not meant to create and put on a shelf to collect dust. A good plan is dynamic and constantly being checked against to keep your goals on track.
This is a great time to chat with your financial and tax advisors about preparing for the new year. Are your portfolios meeting your family’s needs? Did you have any tax surprises this year? Do you need some cash on hand for tax season? Have these conversations now so you can start with a fresh plan for 2023 and your advisor can be prepared when it’s time to make those payments.
Do you have things coming up next year to prepare for? Adding to the family, getting married / divorced, moving, new job, kids off to college, job change? Talk to your advisors before they happen to inquire if there are things you can do ahead of time to prepare – or to know if there’s some tax benefit!
On a tight budget? Set a spending budget for the holidays and stick to it! Friends and family would rather have your time than a gift, especially if they know it is stretching you financially to buy for so many people.
Consider giving to a niece/nephew, granddaughter/grandson, son or daughter’s 529 account rather than giving one more gift.
Rather than all the gifts (you know who you are), plan a family trip later in the year! Get everyone’s buy in and start planning something super fun to look forward too!
INVESTMENTS
Are you holding some investments that don’t necessarily fit with your investment policy statement? The end of the year is a great time to do some housekeeping. It fit’s right into tax harvesting!
Consider cleaning up “small positions” that may have arrived as spin-offs or dividends.
Get a call on the calendar with your financial advisor to discuss your priorities and make sure you’re on the same page. They want to help you succeed!
Are you worried about the market but shoving it down to not think about it? Have that conversation and ask for some adjustments to help you sleep at night. If your advisor pushes back a little, find some middle ground – and remember that it’s not about timing the market, it’s about time in the market.
At a party? Have a friend with a great idea? Call your advisor for some advice before you make a move on that. Remember that your financial situation is unique to you, and your friends to them. That idea might be great for them, but have inherent risks that it would keep you up at night while they sleep soundly knowing they have plenty of cash if it didn’t work out. What’s good for one isn’t necessarily good for another.
LEGAL
Have you seen your wills, powers of attorney, guardianship documents in a while? Does a trusted friend, advisor or family member have a copy of them?
If you don’t have documents drawn up, ask one of your advisors for a recommendation to a legal professional. They will know your personal situation and be able to suggest 2 or 3 attorneys that may be a good fit for you. Same thought applies, what works for one family may not work for another! Just like your other advisors, it’s important to work with someone whose temperament matches yours and what you are trying to do!
INSURANCE
Have any special gifts being purchased in the next few months? Call your insurance agent to discuss if they should be added to your policy.
While you have them on the phone, check in to ask if you’re properly covered. Real estate has increased across the U.S. creating a possible disconnect between what your policy is written for and replacement costs for your house.
GOAL SETTING FOR NEXT YEAR
If you have kiddo’s (any age really), use the holidays as an opportunity to talk about giving. You can have some fun researching the charity(s) for family giving!
When the family is all together, talk about everyone’s dreams for the next year, 3 or 5 years. How can you support each other and is there an outside advisor who can support you in achieving those dreams? If so, go find that person to make it happen!
PARTING THOUGHTS
The holidays can bring a wide range of emotions – from a wonderful warmth being with friends and family to loneliness and hard nights – and all the feelings in between, sometimes all in one day! Remember to take the time and space that you need to stay healthy and take care of yourself physically and mentally.
This is not meant to be tax advice, investment advice, planning advice, legal advice or goal setting advice! This list is intended to get you thinking and then meet with or find an advisor to help you turn ideas into reality based upon your personal situation. Cocktail parties are great fun, but not where individualized advice and recommendations are made. Enjoy that glass (responsibly) and little smokies (yum) but remember that not all ideas are meant for you!
Most importantly, remember that kindness and time are the ultimate gifts you can give someone.