Five smart year-end financial moves

It's time to get smart with some wise year-end financial moves. Here are five that we're doing right now …

Time flies by, faster and faster. Here it is, the end of December already?!

Since most Americans file on a calendar-year basis, this is the time of year that finances get wrapped up, for better or worse.

Year-end financial moves to help get the yearI'm doing a few things to make this wrap-up better rather than worse. Here they are:

Look for next year's tax forms

Yeah, I know, the last thing we all want to think about at this time of year is taxes! That's an April thing! But here's why it's not a bad idea to check things out sooner rather than later. It easy to get into a rhythm once your tax posture settles down, and in most cases, it's the same thing from year to year. But when things change, it can catch you flat-footed. In May 2017, I got a couple of scary letters from the IRS, billing me nearly $1600. What happened is that they moved the Form 1065 filing deadline a month earlier than it had been. I filed them at the same time I had the previous year, except it was now late. Thankfully, I got the entire penalty forgiven, but it taught me to check things early.

Check that you've burned through your flexible spending account if you have one

This kind of flexible spending account is an employer-provided arrangement for using pre-tax money to spend on particular kinds of expenses, like medical expenses or dependent-care expenses. It used to be the case that there was a 2 1/2 month grace period for spending the year's money (that is, I could spend 2015's money through mid-March of 2016). That's changed. Now, I need to spend the money that year … BUT I can carry over up to $500 to next year if I make an election next year. This year, I think I'll be all right, but I need to file some claims.

Set yourself up for next year's finances

As I'm writing this post I'm also working on Quicken in the background to get my accounts set up to track next year. I haven't followed through yet to be able to follow through with a whole year's worth of transactions yet 🙁 so I'm trying again for this coming year. You only really fail when you stop trying, right?

Make charitable contributions by year end if you itemize deductions

(If you claim the standard deduction, then it really doesn't matter much when you contribute, since the contributions aren't tax-deductible if you don't itemize.) By getting your contributions in by the end of the year, you can claim them on that year's taxes. Contribute in the first part of January, you'll need to wait until the following year. The closer to the end of the year you get, the more you'll need to prove that you actually contributed before the new year.

Rebalance your portfolio and sell off losses if it makes sense

This is something you'll need to judge for yourself but if you've been meaning to get rid of some underperforming assets (like stocks that have lost money) then you can sell before year's end and claim the loss against similar gains when you file beginning of the following year. Gains and losses are claimed in the tax year of the sale. Also, if you have a target asset allocation, then this is as good a time as ever to see whether things need to be rebalanced.