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Your Year-End Financial Checklist

| December 18, 2020

As you get to the end of your year there are lots of last-minute things you need to work on when it comes to the goals you wanted to accomplish in 2020. Here are some parts of your financial life to think about before we start 2021.

 

Keep in mind this presentation is for your informational purposes only and isn't a replacement for other advice you have received. Make certain to contact your tax or legal professional before modifying your tax strategy. One more time… the ideas I am presenting are not intended to provide specific advice.  

 

Life events. Here are some questions to ask yourself when evaluating any large life changes in the last year: Did you happen to get married or divorced this year? Did you move or change jobs? Did you buy a home or business? Was there a new addition to your family this year? Did you receive an inheritance or a gift? All these circumstances can have a financial impact on your life as well as the way you invest and plan for retirement and wind down your career or business.

 

Your investments. Now is a good time to review your investments. You'll want to understand your portfolio positions and how it applies to your goals and objectives. Did any life events change your views on how you are currently invested? Did any life events change your goals for the future? Look over your portfolio positions and revisit your asset allocation. Remember, asset allocation and diversification are approaches to help manage investment risk. They do not guarantee against investment loss.

 

Your retirement strategy. You may want to consider contributing the maximum to your retirement accounts. It's a good idea to review any retirement accounts you may have through your work and find out what option are available to you. Does your employer offer a Roth option for your 401k? This is also a great time to decide on making catch-up contributions if you are eligible. Catch-up contributions are an additional amount above the maximum contribution allowable once you reach age 50. The amount varies by the type of retirement account.

 

Your tax situation. It's a good idea to consider checking in with your tax professional before the year ends, especially if you have questions about expenses or deductions from this year. It may be a good idea to review any sales of property as well as both realized and unrealized gains and losses. Do you take advantage of tax-loss harvesting? What is tax-loss harvesting? It’s the practice of taking capital losses (selling non-retirement securities worth less than what you first paid for them) to manage capital gains. You should also consider that up to $3,000 of capital losses in excess of capital gains can be deducted from ordinary income, and any remaining capital losses above that amount can be carried forward to offset capital gains in upcoming years. Lastly, check on your tax withholdings. You may find that you have withheld too little or too much. It’s a good idea to amend your withholdings before the end of the year. Considering any of these strategies should be made with the guidance of a tax and financial professional. 1,2

 

Your charitable gifting goals. Are you planning on making any charitable contributions or contributions to education accounts? Are you planning on making any desired cash gifts to family members? The annual federal gift tax exclusion allows you to give away up to $15,000 in 2020, meaning you can gift as much as $15,000 to as many individuals as you like this year, tax-free. Such gifts do not count against the lifetime estate tax exemption amount, as long as they stay beneath the annual federal gift tax exclusion threshold. 2,3

 

Your life insurance coverage. The end of the year is an excellent time to double-check that your policies and beneficiaries are up to date. Don't forget to review your beneficiaries and think about whether your life has changed in a way that would affect how your assets are distributed when you pass away. For example, I have a client that when we did a review of all his accounts and the beneficiary designations were setup we found that he had one account that still had his ex-wife as a beneficiary on it. That would have been a real problem for his wife and 4 kids had we not discovered it when we did.

 

If your curious about any of the information I’ve discuss today, please give me a call at 928-639-3828 and we can discuss what financial strategies might work best for you.

 

Citations

  1. Investopedia.com, April 18, 2020
  2. turbotax.intuit.com, October 20, 2020
  3. irs.gov, September 19, 2020

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.