There’s more to do than plan your New Year’s party – the final days of the year are an important time to take a good look at your finances. Financial professional Mindy McIntosh talks with WSMH FOX66 Profitt Report about five smart money moves to make before the New Year that will help your finances in 2018 and beyond!
1. Prep For Tax Season – Get folders for all your income, expenses and deductions and your investments. You can break your deductions down by category, for example, create sections for medical, charity and business.
2. Reduce Your Tax Bill – Look for any payments you can make early, like your January mortgage payment. If you can make it in December, you can deduct the interest on the current year. If you have a 401(k) at work, bump up your contributions so more of your income is tax-deferred. And, of course, be charitable! Donations made to charities in 2017 may be deductible on this year’s taxes.
3. Set Your 2018 Financial Plan – Did you have any unnecessary expenses in 2017 that you can cut next year? Can you bump up your savings in 2018? If you don’t have a budget, now is the time to set one!
4. Convert to a Roth IRA – You do not get upfront tax breaks on a Roth IRA, however, your withdrawals are made tax-free as long as you are older than 59 1/2. Roth IRAs are subject to what’s called the 5-year rule; you cannot withdraw your earnings tax-free until five years after the tax year you make your first contribution. No matter when you make a conversion in 2017, the clock gets set back to January 1st, 2017.
5. Check Your Insurance – Life insurance takes care of your family, helping ensure they will be financially fit even when you are not around. A good rule of thumb is to get enough coverage for 10 to 15 times your current salary. Make sure your beneficiaries are up to date. You may need to make changes if there were any major life changes, like births, deaths, marriages or divorces this year.
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