Complete This Year End Financial Checklist For Greater Wealth

year end financial checklistIt’s never too early to think about ending the year strong, taking actions to reduce taxes, and staying on top of your financial health. Before another year comes to a close you can take steps to save, shape up your investments, get organized, and minimize your tax liability. This year end financial checklist can help you save time while getting your finances in order.

Financial To Dos Before Year End

1. Review Your Tax Status and Contact Info At Work

When was the last time you updated your W9 and contact information with your employer? It's a good habit to do this annually and every time you change jobs or relocate. Make sure your information is up to date at both your previous and current employers.

You'll want to submit a new W9 if you got married, divorced, had a baby or a new number of dependents. These lifestyle changes can affect how much tax you should withhold from your paychecks and any tax forms you need to file with your returns. A simple check now can save you a lot of headaches later.

2. Maximize Your Retirement Contributions

The majority of Americans are not saving enough for retirement. Are you? Pay yourself first and help your retirement accounts reach their full potential by maxing out your contributions each year. The current maximum 401(k) contribution set by the IRS for 2019 is $19,000.

If you don’t have access to a 401(k), you still have time to contribute to a traditional or Roth IRA account. Even if you’ve already reached the contribution maximums in your retirement accounts this year, you can still continue to save beyond the contribution limits set by the IRS.

3. Don't Forget Open Enrollment 

Things can get super hectic in Q4 but don't overlook open enrollment. Review your insurance plans and make sure you don’t miss your company’s deadline. Utilize this time to do a thorough review of your medical, dental, vision, life, disability, auto and home insurance policies.

If you've had a lifestyle change such as getting married or having a baby, you could benefit from modified coverage that better fits your new lifestyle. It'e beneficial to analyze your insurance premiums, claims and out of pocket expenses from the last year or two so you can personalize your policies to be a great fit in the new year.

4. Check Your Vacation Accrual Balance

I never had a problem taking all of my vacation days when I was working in corporate America, but many people do. Get to know your employer's vacation policy because some companies enforce accrual caps that limit the amount of days you can carry at any given time or rollover into the new year.

Double check your balance so you won't lose any precious paid vacation days before the year is up. Your vacations days are worth more than just money. Taking time off is important for your mental health. If you don’t want to travel, a staycation is an easy way to recharge and de-stress.

5. Submit Property Taxes On Time Or Prepay

Many states have year end property tax deadlines. States with December due dates include Alabama, California, Kansas, Kentucky, Louisiana, Missouri, New Hampshire, New Mexico, Oklahoma and Virginia. Paying by the deadline will save you from owing costly penalties and fees.

If you want to add real estate to your investment portfolio without actually owning physical properties, check out my real estate crowdfunding resource center. There are many affordable ways to quickly diversify into real estate without needing a lot of capital.

6. Get Your Expense Reports In Order

Submit all of your expense reports before the year is up so you can get reimbursed before the cutoff.

In addition, if you’re a business owner, run your P&L asap. You may want to consider shifting some expenses you would normally pay in January or February into the month of December. This could potentially lower your company’s tax liability for the closing year.

7. Review And Claim Your Losses

Investing can take a thick skin, especially during volatile markets. Try not to get discouraged if some of your investments are going the wrong way. At times, waiting for a stock to rebound that's declined a lot can become an opportunity cost. Losing money is painful, but sometimes you're better off cutting your losses and moving on.

The maximum limit you can claim as a tax deduction in stock losses is still only $3,000 as of 2019. However, any remaining losses can be carried forward to future years until the entire loss is claimed. Capital losses first offset capital gains of the same type (ex. sales of short-term stock held less than one year). Next, they offset any capital gains of the other type (ex. sales of long-term stock held more than one year), and lastly they offset other income.

Note: you can’t claim a stock loss if you repurchase shares of the same investment within 60 days. Doing so is called a “wash sale,” which isn’t allowed for tax deduction purposes.

8. Rebalance Your Investment Accounts

If you don't know when you last rebalanced your investment accounts, they’re due for a checkup. Take a look at your allocations and see if they have shifted out of your target range.

Rebalancing helps you keep the weightings of your asset classes, sectors, market capitalizations, country exposures, individual holdings, and underlying strategies in line with your risk tolerance and investment goals. It also disciplines you to keep buying low and selling high, instead of hanging onto investments too long, and can keep you more actively involved in your portfolio’s performance.

9. Consider Making Charitable Contributions

If you make a donation to a qualified charity before December 31st, you can be eligible to claim it as a deduction from your income when you file taxes by April 15th.

Just be sure to keep receipts with the dates and donation details for all of your contributions. If you donated $250 or more to a single charity, ask for  a detailed written confirmation. Plan to fill out form 8382 if you have more than $500 in charitable deductions when you file taxes, and get an independent appraisal if you donate valuable property worth more than $5,000.

10. Tally Up Your Net Worth And Set New Goals

Do you know how your financial health performed this year? One of the most important things on your year end financial checklist is to review your net worth and set new goals for next year. Being financially healthy is an ongoing responsibility.

The good news is there are lots of free resources you can utilize to monitor your net worth and financial accounts with ease. My favorite platform is Personal Capital.

With Personal Capital, you can do the following things for free:

  • Automatically track your net worth
  • Analyze your investment portfolios for excessive fees
  • Analyze your investment portfolios for proper asset allocation
  • Track and manage your income and expenses
  • Run various retirement planning calculations to ensure a better financial future

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About the Author: Sam started Financial Samurai in 2009 as a way to make sense of the financial crisis. He proceeded to spend the next 13 years after attending The College of William & Mary and UC Berkeley for b-school working at a couple major investment banks. He owns properties in San Francisco, Lake Tahoe, and Honolulu and invested in real estate crowdfunding. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $220,000 a year in passive income. He spends time playing tennis, taking care of his family and writing online to help others achieve financial freedom sooner, rather than later. 

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