It is nearing the end of another year, but don't let the holiday season whisk you away from your fiscal responsibilities. These are some of the smart money moves you can make before the year closes off to ensure you'll be in good shape for the New Year, and to close off the old with a smile.
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Ideally, you've kept your tax receipts organized as the year's progressed, but if you suddenly find you have a shoe box full of receipts, now is the time to get it organized before tax season hits. You'll probably be too busy and frazzled in the New Year to give this the proper attention, so you might as well get it done now.
Label envelopes by their deductible expense categories and the date of the tax year, and start sorting your receipts into them. If you're ambitious, tally up the amounts in each category and write it on the front of the envelope for easy access.
Next, keep your other relevant tax statements set aside into another envelope labeled with the tax year, and bundle everything together. Don't forget to also pull out your tax information and statements for last year because you'll more than likely need some information of what you deferred from the previous year such as charitable donations or other claims.
As you go along, make notes about the tax year such as your estimated income and other things you'll need from your bank or company before filing.
Review Your Financial Status
Make a list of your financial assets, estate holdings and insurance policies, and update your beneficiaries on all of the accounts. Review and revise as needed with the future in mind by re-balancing or diversifying; these are decisions that should get an in-depth review at least once a year, although keeping tabs on a monthly basis is best.
Take time to go through these statements with your partner so they or you are fully aware of what the situation is and where all the documents are kept. If you have the information, doing a family review of your total income, expenses and net worth at year-end might be helpful for planning or revising the budget for the new year.
Spend as Required
Research available deductions for the year to find additional deductions that you may not be aware of.
Other spending might include:
• Giving cash gifts to reduce your estate's value up to the maximum limit
• Investing more into your retirement accounts for those tax deductions
• Spend your medical allowances if they can't be carried over to the next year or will expire
• Take off any extra vacation days if you can't carry them over to the next year or if they'll be written off.
Create an Emergency Document
In case of an emergency, it's always a good idea to have an overview document of everything you or your family might need in case something happens. Most people don't tend to talk about these important pieces of information on a daily basis (if at all) until it's too late. You could start with the following:
• Birth date
• Social security number
• Driver's license number
• Passport number
• Employment information
Important Statements and their Location
• Financial assets and their banks (retirement, bank accounts)
• Wills and trusts
• Physical assets (property deeds, automobile registrations)
• Insurance policies
• Certificates (birth, marriage, other)
In addition to the above, giving any online information such as banking passwords and account numbers is recommended just in case a trusted family member needs to take over your daily affairs in the interim.
The Bottom Line
Keep in mind that not all of the information above may be applicable to you.
Everyone's situation is unique, and these are general tips to get you thinking about what you or your family might need. If you've been diligent on updating your situation as the year progressed, you may not need to do very much except drink that glass of eggnog, sit back and relax, but if you haven't done any of the above, then perhaps 'tis the season to get your financial situation organized and on track so the next year will be a piece of cake.