While we’re all busy shopping and spending time with family now, it’s easy to forget about our finances and taxes. However, the end of the year is a critical time to reexamine your financial situation and make some key decisions to help your bank account in 2016.
Consider these 2015 end-of-year finance and tax tips:
1. Bump up your retirement savings.
There is still time to bump up your savings rate into your employer-sponsored retirement account, such as a 401(k). For the year 2015, workers under 50 years of age are allowed to contribute up to the maximum amount of $18,000. This is a slight increase of $500 compared to 2014. For those 50 and older, the maximum amount you can contribute to such a retirement savings account is an additional $6,000.
At the very least, check in on any retirement savings accounts you own, even if you do not make a contribution this month. These accounts might be housed in several different financial institutions, so be sure you cover them all.
2. Consider your life changes in 2015.
If you landed a new job, sold or bought a house, or expanded your family with a new baby, you might need to take on new insurance policies for your family. You should also reexamine your investments and look at where you stand in terms of income. Life changes can trigger additional tax savings through IRS tax deductions and tax credits, so be sure to find out what you might qualify for now that you did not qualify for in 2014.
3. Review your spending over the past year.
Taking a close look back at what you’ve spent money on this year can help you plan for 2016. Determine if you can cut some of these expenditures in the coming year. Also, think about whether to open a new savings account or obtain a company credit card for your small business if you’ve been using a personal card.
4. Reduce your end-of-year taxable income.
Many IRS tax credits require taxpayers to meet certain income thresholds in order to take advantage of them, including the child tax credit. If you foresee exceeding an income threshold for one or more of these tax credits, it might be worth reducing your taxable income by year’s end if you can. Of course, this can be done completely legitimately so as not to trigger an IRS audit.
For example, let’s say you are expecting a holiday bonus from your employer in late December. Or, if you work as a small business owner, maybe you are anticipating a large payment from your client before December 31st. If possible, consider delaying the arrival of this income into your personal or business bank account. Doing so can help reduce your expected amount of 2015 taxable income, and it can therefore allow you to stay within the limits of various tax breaks so you can claim them on your tax return.
5. Schedule your yearly doctor’s appointment.
Nobody likes going to the doctor or dentist. But if you are in need of some type of medical checkup, consider picking up the phone and scheduling an appointment now. In order to deduct medical expenses, they must add up to 10% of your adjusted gross income (AGI), or 7.5% if you are over age 65. This is why it might be worth it to get that yearly checkup or dental cleaning before the calendar turns to 2016.
6. Consider donating to a qualifying charity.
Making a contribution to a charity gives you that good feeling inside knowing you’re making a difference. It’s also good for your wallet by reducing your IRS income taxes. Consider cleaning out your garage, closet, or storage unit by donating items to qualifying charitable organizations, such as a 501(c)3 non-profit.
Clothes, toys, electronics, vehicles, and stocks are just some of the many things you can donate to a qualifying charity and write off on your IRS tax form. Remember to obtain the proper documentation and receipts from the organizations to which you donate. You’ll need this paperwork when filing your taxes with Uncle Sam.
7. Organize your tax documents.
The 2016 tax season is right around the corner. Get all of your tax-related documents in order so that you’re prepared to file your taxes on time. In fact, being extra prepared can help you file early with the IRS, which means you’ll get your refund check sooner and can avoid tax fraud this way. Receipts, bank statements, and invoices are just a handful of the records that can help you be ready for the filing season.
To get additional 2015 end-of-year finance and tax tips, turn to 1-800Accountant today. Call 1-800-222-6868 or check out www.1-800Accountant.