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5 Smart End Of Year Financial Moves

The hardest thing about getting things done this time of the year, is that it is THIS TIME OF THE YEAR. With Christmas and New Year's (and all of the related social events), it is the worst season to find the time to sit down and deal with your finances. The problem is, however, that this is prime time for making end of year moves that can have an enormous impact in your financial picture for next year.


5 Smart End Of Year Financial Moves

1. Make a financial contribution to your favorite charity or ministry

The great thing about making charitable contributions this time of year is that the tax benefit is merely weeks away and not months. This is a great time to take a look at your bank balance and decide if you have any surplus funds to donate. This is the season that many charities and ministries need extra funds as well, and being able to add that as a deduction to your 2014 taxes makes it a win-win for both parties (not to mention the good cause to which the organization will use it toward). 

2. Make an in-kind donation to a charity or ministry

Many times when we think about charitable contributions we think only in terms of cash. This is a great time, however, to make in-kind donations (property). This can be anything from a used car you no longer need, to clothing, appliances, household items, sports equipment, and more. Now, even going a step further here, you might consider gifting stock. Giving the gift of stock to a charity can create a highly valuable tax benefit. If you own shares of stock that have gone up substantially in value, you will be hit with capital gains taxes on your profits when you sell (unless it is inside a retirement account). By gifting your shares to a non-profit, you avoid the capital gains and get a deduction for the current market value. 

If you have a losing stock position, the strategy is reversed. Sell your losing stock,  take your tax loss, and then gift the cash.

Some Interesting End Of Year IRA Strategies For Year End


3. Defer income into the new year

We all need some extra money around Christmas, but it may make sense to push some of your income into 2015. For example, if this is the time of year that your employer pays out bonuses, you may have the option to request that the bonus come after January 1 rather than around Christmas. By waiting just one additional week, you can push that income into next year and keep it off your next tax return. It is not enough to simply delay picking up your check, you need to ask your payroll department to officially make your bonus a 2015 payment.

4. Sell losing investments

Investment experts say that this is a good time of the year to do a review of your investment holdings. There are a lot of reasons to do an end of year review, but one of the most significant is to consider selling your losing stock positions. By selling your losers prior to the end of the year, you will have capital losses to offset gains you may have realized on other stock market profits. Conversely, if are considering the sale of any stocks in your portfolio that are big winners, consider waiting to do so until after January 1. Get it? We are trying to push profits and income into the next year and capture losses and write offs for this year.

5. Reconsider your health insurance options

Although it is not a tax issue (except for the penalty for not having coverage), I felt that health insurance should be on this top five list. Obamacare enrollment has opened up again and will close on February 15. This is your chance to reconsider your health insurance options for the next year. I would suggest using your state exchange to see what rates are being offered. Depending on your health situation and age, you may find the state exchange the most affordable option. Another possibility is Christian Medical Expense Sharing (this is what I have opted to do). 

There are quite a lot of other end of year financial moves that could be added to this list

  • Make repairs to rental properties
  • Pay business expenses early
  • Make large equipment purchases in your business
  • Fund 401K and other company retirement plans

My most important advice is to discuss your end of year tax planning with your accountant. Each person's situation is unique. Some of these ideas may not apply at all to you based on a large number of factors (income, whether you itemize or not, any losses you are already carrying foward from prior years, etc...).

Helping you make the most of God's money!

James L. Paris 
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