Money Moves to Make Now To Get Ahead at Tax Time.
We are just three months shy of the New Year and this is a great time to get a jumpstart on coming out ahead at tax time. A little strategic thinking, planning and taking action now could give you a reduction in your tax bill come April, perhaps boost your retirement savings and college fund savings. You might even see a significant reduction in any debt you might owe.
A great place to start is to take a close look at your investments. Your portfolio may benefit from a rebalance, especially if it’s been awhile since you’ve made any changes. With the recent volatility in the market you might discover that your allocations may not match your risk tolerance.
If you have a 401(k) look into maxing out your contributions before the end of the year. If you’re under 50 years old, you can contribute a total of $18,000. That’s a $500 increase over last year. If you’re over 50, you can contribute up to $24,000.
Are you enrolled in a Flexible Spending Account? If so, now is the time to see if you have excess funds that must be used before year’s end. Even if your employer lets you carry over an unused balance, you may be better off stocking up on eligible items that can round out your first-aid kits. Some eligible items include sunscreen of 30 SPF or higher, diabetic testing kits, and hot and cold packs.
Other items to look at include your credit rating and any high-rate credit card balances. If your credit score is good, you could benefit from a zero percent balance transfer offer since the Federal Reserve is expected to raise interest rates in the near future. When the Fed raises interest rates credit card companies usually follow suit.
Making these adjustments now will help you breathe easier at tax time. And that’s always a relief.