This Sunday, November 6, we’ll turn our clocks back one hour as we end Daylight Savings Time and return to Standard Time. With 2017 in sight, use this extra hour productively to assess your finances before year-end. Over the course of one hour, you can dedicate 15 to 20 minutes to organize a few financial items.
Tax Loss Harvesting
Look at the investments you’ve made over the course of the year to see if you can harvest any tax losses. If any investments are worth less than when you made the investment, by selling that security and replacing with a similar one, you can take the loss to offset gains. If you’ve kept a list of statements over the year, it’s simple to see what holdings are worth less now and where you can take a loss on an investment to minimize taxes on gains.
The deadline to make charitable contributions is getting closer. If you want to make any additional donations this year for a tax deduction, figure out what charities you’d like to give to and how much. Generally, you can deduct up to 50 percent of your adjusted gross income. Hopefully you have the donations you’ve made this year on file. If you don’t, take the time now to track that down so you can figure out how much of a charitable deduction you have for 2016.
If you have money in an IRA, consider if it makes sense for you to do a Roth conversion this year. If you’d like to make a conversion, calculate how much you should convert. When converting to a Roth IRA, you pay taxes on the traditional IRA funds now, but you won’t have to when drawing down on those assets in the future. If your income this year isn’t as high as it used to be, it might be a good year to take advantage of a conversion since you may be in a lower tax bracket.
Check up on Retirement Accounts
Make sure you are deferring as much as you can into an employer-sponsored retirement plan and check if you have additional income you can put towards your company 401(k). Also, you’ll want to maximize any matching that the company provides to employees. If you aren’t taking full advantage of matching, you are missing out on free money for your retirement. In addition, check in on asset allocation to make sure your money is appropriately allocated across your portfolio.
It’s easy to let that extra hour slip by unnoticed, but with an extra hour in the day, it’s a good time of year to check in on a few financial planning items before getting busy for the holidays and ringing in the New Year.
Fort Pitt does not provide tax advice. We encourage you to contact your tax professional with any questions.