The start of tax time is on the horizon and it’s time to prepare your end-of-year money moves. No one wants to think about their personal finances around the holidays but it’s important to mitigate your tax burden and avoid an April surprise. This year it’s particularly harder due to soaring inflation and stock market declines but you don’t want to prolong this. Here are my 10 end-of-year money moves.
- Roth Conversion. If your income declined due to the economy it might be worth considering a Roth IRA conversion. You can transfer pre-tax IRA money at a lower tax rate to an after-tax Roth IRA.
- Max out a Roth. Take advantage of the down market and max out your Roth 401(k) or Roth IRA. When the market rebounds you can avoid taxes by locking in tax free gains.
- Attack student loan principal. On 31 December the pause on interest for federal student loans will end.
- Contribute to a 529 College Savings plan. The 31st is the last day you can contribute to a 529 for 2022.
- Max out your Health Saving Account (HSA). HSAs are triple tax free. Your contributions reduce your taxable income, investment growth in the account is tax free and qualified withdrawals are tax free.
- Use your remaining Flexible Savings Account (FSA) funds. Most FSAs have a use it or lose it clause by the end of the year.
- Give to charity. Generally, you can only deduct charitable contributions if you itemize. Many nonprofits have taken a hit this year and even a small donation can go a long way.
- Check credit reports. Go to https://www.annualcreditreport.com/ to check yours.
- Review your budget. Cut things you really don’t need. Inflation isn’t going away, just slowing.
- Check your tax withholding. Avoid taking home a smaller check and giving the Uncle Sam an interest free loan. You can adjust your withholding by filling out a new W-4 form and submitting it to your work.
If you have questions please feel free to schedule some time to chat. Here’s my link
