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End of the Year Financial Tips and Tax Strategies


When it comes to the end of the year, it seems like everyone is in a rush to finish their shopping, decorating and preparing for house guests. But in addition to all of the seasonal things going on right now, the end of the year and beginning of a new one is the perfect time to reflect upon your past financial year and review your portfolio.

Have you been able to save as much as you wanted? How is your debt picture looking? Are you expecting to owe a large tax bill at the beginning of the year? Have you had any major life changes this year that may affect your financial picture? Did you start a business this year? If any of these questions made you think a little harder, we urge you to give us a call and schedule a client meeting to go over everything together.

But in the meantime, we wanted to share a few financial and tax tips that can be beneficial for everyone this time of year.

1.      Think outside the gift box: Consider giving your favorite non-profit appreciated stocks or mutual funds this year. The benefit of doing this is that the non-profit receives the full value of the stock or mutual fund without you having to sell it and pay the capital gains tax. Additionally, you receive a tax deduction for the full appreciated value of the stock or mutual fund. If you're doing any end-of-year purging, it is also wise to donate unwanted items to non-profits such as the Salvation Army or Goodwill and use it as a tax deduction.

2.       Another gift idea that benefits you as well as the receiver is cash gifting to your children: The IRS lets you gift $14,000 per person per child without having to file a gift tax return.  If you are trying to help out a child who’s saving to buy a home, this is a great idea.

3.       Contribute the maximum amount to your retirement accounts: If you have not already done so, max out your 401(k) or 403(b) with your last paycheck to maximize the tax incentives.

4.       Use your flexible spending account if you have one: If you are enrolled in a flexible spending account and you don’t use it by December 31st, you will lose the money in the account—it cannot be rolled over to 2016.

5.       Fund your child’s Section 529 College Savings Program:  Many states, including Maryland, Virginia and the District of Columbia allow for tax deductions from state income tax if the contribution is postmarked by December 31st.

6.       Roth IRA Conversion:  If you think your income tax rate in retirement will be much less than your tax rate today, it may make sense to do a Roth Conversion before the end of the year.  You will generally be paying higher tax rates now for the benefit of an account which will grow tax-free in the future. Remember that this works best when you are able to pay taxes on the conversion with funds outside the IRA.   

7.       If you’re getting a big refund, you might want to adjust your withholdings:  This is done by submitting a new W-4 Form to your employer.  Remember, the government doesn’t pay you any interest for lending them extra money throughout the year.

If you have any questions or concerns about any of this, please give us a call at 301-258-1300 to schedule a meeting. Happy Holidays! 


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