Written by:  Marilee Falco, CFP®, ChFC

The holidays are almost here and everyone is busy.  Nonetheless, it is important to take some time to make sure your year-end tax items are complete. There is no extension for December 31st!

The following items must be completed by December 31st:

  • Charitable Donations. 2019 charitable donations must be made by December 31st. If you are over 70½, you might want to consider a Qualified Charitable Distribution.  Donations of appreciated stock are another way to donate to your favorite charities.
  • Required Minimum Distributions (RMD). If you are over 70½ and own a Traditional IRA account, you must take your RMD prior to 12/31.  If you inherited an IRA, you may be required to take a distribution even if you are younger than 70½.
  • Roth Conversions. If you want to convert funds in an IRA to a Roth IRA, it must be done by 12/31.
  • Tax Loss Harvesting. If you have any stocks on which you would incur a loss if sold, it might be beneficial to sell them prior to year-end to offset any capital gains you may have had this year.
  • 529 Plan Contributions. 529 plan contributions must be received by the custodian well before the 12/31 deadline in most states to be credited for 2019 if you plan to take a deduction on your state tax return.

The following items can wait until January:

  • W-4 Withholding. Do you have the proper withholding on your W-4 at work? If your marital status or family situation changed recently, make sure you update your W-4 and your allowances.
  • 401k Contributions. Are you maximizing your 401k contributions? In 2020, the maximum contribution will be $19,500 plus an additional $6,500 for those over age 50.
  • Health Savings Account. Do you have a Health Savings Account? The rules are complex, but overall we like HSAs. Be sure you are contributing if possible.
  • Beneficiaries. This is a good time to review the beneficiaries on your 401ks, HSAs, IRAs and Life Insurance Policies to make sure they are accurate.
  • Estimated Tax Payment. You have until January 15, 2020 to make an estimated tax payment for 2019 if you think you will owe money to the IRS and want to avoid a penalty.
  • Tax Documents. Gather together all of your tax documents that come in the mail between January and March. If you received income for the first time in 2019 from a pension, Social Security, self-employment, or any other means, be sure to report the new information on your tax return.   Your accountant or your tax software won’t be looking for new sources of income. Likewise, if you sold your home or other assets be sure to include the 1099 information on your tax return.

As IRS rules are complicated and complex, and each individual’s situation is different, we recommend that you speak to your Agili Financial Strategist about any tax questions.  If you are not currently a client of Agili, speak to your tax preparer or get started with Agili. We would love to hear from you.