Don't write off this year just yet. Here are seven smart financial moves to make now that can impact your financial health into the new year and beyond.
December is a great time to make a donation to your church, a ministry or other non-profit organization. The recipient of your donation will be grateful for your gift, and your contribution could cut down on your tax bill. Your donation must be made by December 31 to count toward this year's taxes, and if your donation is valued at $250 or more, you'll need proof of your contribution in order to count the deduction. Your church can provide a receipt.
Adding some extra cash to your employer-sponsored retirement plan or Traditional IRA will earn you an even greater tax deduction for 2023. The boost in your account balance could also pay off in the long run as our investment has the opportunity to grow. This is also a good time to ensure that you're saving enough for retirement. Use one of our retirement savings and planning calculators to see where you stand. You may decide this is a good time to increase your contributions. In a few years, you'll look back and be thankful you chose to make this year-end investment.
Are your retirement investments properly allocated? If you are a GuideStone participant, explore all of the GuideStone Funds options and log in to MyGuideStone to review your allocations. You can also find investment guidance by using the Investment Recommendation tool to review appropriate investment options based on your financial situation, timeline and risk tolerance. Just answer a few questions and you'll receive investment suggestions that might be appropriate for your situation. If you want to make changes, choose the "Retirement & Investments" tab inside MyGuideStone.
Did you get married this year? Is there a new child in your household? Do you have an adult child who no longer qualifies as a dependent? Then it might be time to update your tax withholding. The IRS Withholding Calculator can help you determine how much you should be withholding in order to meet your tax obligations.
Flexible spending accounts for dependent care or medical expenses are a use-it-or-lose-it proposition. Check your balance now and look for ways to spend down the account before the end of the year. Start by ensuring that you've submitted all your qualifying receipts for the previous year. If you still have a large balance in your medical flexible spending account, consider using the funds in your account to cover large expenses, such as purchasing new eyeglasses.
In some cases, paying bills on December 31 rather than January 1 could help you earn a greater tax deduction for 2023. For instance, pay your January mortgage payment on December 31, and that mortgage interest will be eligible for deductions in 2023, rather than for 2024. If you're paying college tuition for yourself or a dependent, pay the spring tuition bill in December, rather than in January, and you could get an advantage at tax time.
If you are 73 or older, take your required minimum distribution from your IRA, 403(b) or 401(k) before the end of the year. Failure to take a required distribution will result in a penalty of 25% of the required distribution amount! The only exception to this rule is in the year of your first required distribution when the deadline is April 1 of the year after you reach 73. However, there may be tax advantages to taking your first required withdrawal before the end of the year, rather than taking two withdrawals in one year. Your tax advisor can help you determine the best course of action. Remember, you may also satisfy your RMD by making a qualified charitable distribution from your IRA, as long as it meets the IRS requirements.
Spend a few minutes strategically thinking about your finances during the remaining days of this year. It may help you reap rewards during the new tax year.
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