We're in the final week of 2016, and there's one thing that most people can agree on: It was a memorable year. Whether it was positive or negative, that's up to you — as is how you finish it. End this year on a productive note for your personal finances with the following ideas:
Make Your Charitable Contributions Now
Whether you're making them in cash or appreciated securities, now is a great time to send off last-minute charitable contributions. This is especially true if you'll likely be in a lower tax bracket next year — pre-retirees, take note. "Tax rates are not going to be higher next year," says Kelly Graves, Certified Financial Planner at Carroll Financial Associates.
If you go the route of donating appreciated securities, it works like this: If you bought a company's stock at $50 a share and sell it at $100, donating it to charity means you don't have to pay tax on the added value. (You would have to if you kept it.)
"You get $100 credit for the gift, but Uncle Sam's the loser here — nobody had to pay taxes on the capital gains," says Graves. But don't delay — charitable contributions for this year need to be in the mail by December 31.
Take Care of Your Property Taxes Early
Property taxes are generally due the first week of January, so you have the option to put them off a bit. Consider paying them off early to get the deduction now instead. "If tax rates go down, you'll save money, too," says Graves.
Consider Rebalancing Your Portfolio
Whether inside or outside a retirement account, consider rebalancing your investments before year's end to align them with your goals, says Sheryl Garrett, founder of Garrett Planning Network.
If some investments have outperformed and you have a larger balance of them than you need — for example, too much tech stock — you could sell some off and — though it seems counter-intuitive — buy more of the underperforming aspects of your portfolio to return to your target mix of stocks, bonds and other assets.
The most important question to ask yourself: If you had the cash, would you buy that investment again today? If not, consider selling it, says Garrett. It's a good litmus test.
Check on Your Retirement Accounts
Before the year's official end, take a look at your retirement plans and make sure you've contributed the maximum amount you can afford to in any IRAs — and your company-sponsored plan, if you have one. For IRAs, the 2016 contribution deadline isn't until tax-filing time, but workplace retirement plan contributions for the year are due by December 31.
If you haven't contributed enough to get the full employer match it's like turning down free money. Note: If you're looking to make a last minute contribution to your work-based retirement account, contact your benefits department or plan administrator immediately. It may not always be possible, but you should give it a try. And if you've missed your company's deadline, use this as a nudge to increase your contribution for next year.
For freelancers, consider opening your own workplace retirement plan.
Something else to consider? If you're self-employed and have a schedule C income — this can also apply to very small businesses — "this might be an excellent time for you to consider a solo 401(k)," says Garrett. Freelancers and other members of the gig economy can choose to do business as a schedule C — it allows you to contribute up to your yearly income from that source. This would require setting up the solo 401(k) by December 31, but it wouldn't require funding until April 15 of next year.
With Hayden Field