We love fall. We love the chilly mornings, feeling snug in wool sweaters and blankets. Of course, when the clock strikes noon and the temperature has reached 77 degrees, we’re sweating — and we vow to plan better for next time. After all, fall is a planning season. The change in temperature not only signals a rearrangement of our closets but also reminds us to organize our financial systems. Here’s what’s at the top of our fall financial to-do lists:
1. SHOP (WISELY).
Are you considering a vehicle purchase this year? This time of year is one of the best times to purchase a car. Beginning in September, lower price points are offered due to next year’s models rolling in. Watch for several offers including zero down and zero percent APR financing.
Do you need new appliances? According to Editor’s Choice Magazine, waiting until Black Friday can net consumers deep discounts on some large appliance purchases.
2. USE YOUR FLEXIBLE SPENDING ACCOUNT.
Check the balance in your flexible spending account, because at year end you must use it or lose it. If your flexible spending account has accumulated a large sum, consider reducing your contributions for 2018.
3. RECONCILE TAXABLE INCOME
Consider tax-harvesting to reduce your 2017 tax liability. You have until Dec. 31 to sell off underperforming stocks. Capital losses that exceed your gains of up to $3,000 can be used to offset your taxable income. Tax law allows any excess to be rolled forward to 2018.
4. ESTIMATE 2017 TAX PAYMENTS
Tax liability can become complicated if you are employed as an independent contractor. With popular services such as Uber and Lyft creating side incomes, additional tax issues emerge. Workers that are new to independent contracting or freelance work may not realize that the government requires quarterly filings for income taxes, and also Social Security and Medicare. Nobody desires a surprise tax bill. Ask a professional to help you estimate now what your taxable income will be at year-end.
5. TAKE YOUR RMD
Many seniors are surprised to learn there’s a harsh penalty if they neglect to take timely distributions from their IRA. Did your candles on the cake this year exceed age 70? Your first RMD must be taken by no later than April 1 of the year after the year you turn 70.5. The tax penalty for failure to withdraw the full RMD amount by April 1, 2018, can be as high as 50 percent of the required shortfall.
6. REVIEW YOUR RISK
Is your stock portfolio protected from the negative impacts of stock market volatility? When is the last time you protected your capital assets and reviewed your insurance policies? There is no way to eliminate all risk, but there are ways to avoid, minimize, or protect your holdings from risk. Fall might be the best time to meet with your financial planner and seek professional advice to protect your assets.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax adviser.
Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on News Radio 830 WCCO on Sunday mornings. Email Bruce and Peg at firstname.lastname@example.org. Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.
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