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December Deadlines That Matter: Universal Year-End Financial Tasks
As the year draws to a close, individuals need to prioritize their year-end financial tasks. These tasks help individuals work toward financial health, prepare for the upcoming year, and meet critical deadlines that can have significant implications for their tax liabilities and financial independence. Below, we’ll delve into the essential year-end financial tasks that everyone should be aware of.
1. Tax planning and compliance
Before the year ends, take the time to review your current tax situation. This review includes compliance with the tax code, as well as identifying opportunities to maximize tax deductions and credits.
- Tax deductions and credits: Evaluate the various deductions and credits you may be eligible to take. Consider making charitable contributions or investing in tax-exempt investments before year’s end.
- Tax loss harvesting: If you have investments that have declined in value, consider selling them to offset capital gains from other investments.
2. Retirement contributions
Maximizing contributions to retirement accounts is another essential year-end financial task. If you haven’t reached your contribution limit for the year, consider making a lump-sum contribution before the deadline of December 31st.
- 401(k) and IRA Contributions: The deadline for these contributions is usually the end of the calendar year.
- Catch-up Contributions: If you’re over 50, take advantage of the opportunity to make additional “catch-up” contributions to your retirement accounts.
3. Debt management
Year-end is a good time to review one’s debt situation, which includes examining credit card debt, mortgages, student loans, and other personal loans.
- Interest rates: If you have high-interest debt, consider ways to reduce your interest payments, such as refinancing or consolidating debt.
- Payment deadlines: Missing payments can negatively impact one’s credit score and incur late fees. Ensure that all debt payments are made on time.
4. Review and adjust investments
The end of the year is a perfect time to review an investment portfolio. Consider the following:
- Rebalancing: This involves adjusting the portfolio to maintain the desired asset allocation.
- Performance review: Review how all investments have performed over the year and make any necessary adjustments.
5. Update plans for retirement
Finally, update your written retirement plan, which involves reviewing the budget, updating your financial goals, and assessing whether you’re on track toward them.
6. Review insurance policies
Year-end is an ideal time to review insurance policies for accuracy, ensuring that appropriate coverage amounts and beneficiary information are in place.
In conclusion, year-end financial tasks not only help you maintain financial health but also set a strong foundation for fiscal discipline in the upcoming year. Collaborate with financial and insurance professionals to review all financial areas and prepare to meet year-end deadlines, ensuring a smooth transition into the new year and a clear path toward your goals.
SWG4868873-1025a This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives. The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed.
Tips For Prepping for the Upcoming Tax Season
As the year winds down, many individuals and businesses turn their attention towards preparing for the upcoming tax season. Diligent tax preparation can help minimize liabilities, maximize returns, and avoid potential complications or penalties. Here are some key tips to prepare for the tax season ahead.
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How The “Big Beautiful Bill” Affects Long-Term Financial Planning
The recent tax legislation, known as the ‘Big Beautiful Bill,’ introduces a number of changes that may affect various aspects of personal finance. This reform impacts various aspects of personal finance, from income tax rates and brackets to modifications in deductions and exemptions. Here’s what investors need to know about the “Big Beautiful Bill,” which is now law.
Changes in tax brackets
One of the most significant changes under the “Big Beautiful Bill” is the restructuring of the federal income tax brackets. While there were previously seven tax brackets, the new system also maintains seven, but at different rates.
For many taxpayers, these lower rates may result in reduced tax liability, depending on their individual circumstances. This could potentially free up funds that might be redirected toward other financial priorities.
Standard deduction and personal exemptions
Another critical aspect of the tax reform is the changes to standard deductions and personal exemptions. The “Big Beautiful Bill” has now nearly doubled the standard deduction.
However, it eliminates personal exemptions. For individuals who traditionally itemize deductions, this means reassessing whether it’s beneficial to continue doing so. In some cases, taking the increased standard deduction could lead to more significant tax savings.
Changes to estate and gift taxes
The reform has implications for estate planning, too. The “Big Beautiful Bill” has effectively doubled the federal estate and gift tax exemptions.
This change increases the amount of wealth that may be transferred free of federal estate or gift tax, which could influence estate planning strategies for some individuals.
Financial and tax professionals can provide guidance regarding how estate and gift tax changes may impact your estate and gift tax situation.
Impact on the mortgage interest deduction
The bill includes changes to the mortgage interest deduction, including a reduction in the cap from $1 million to $750,000 for new mortgages.
Social Security taxes
The Big Beautiful Bill temporarily increases the standard deduction of up to $4,000 for individuals 65 and over, from 2025 to 2028.
Child tax credit
The current $2,000 child tax credit, set to return to the pre-2017 level of $1,000 in 2026, now permanently increases to $2,200 under the bill.
Working with financial and tax professionals can help you navigate this landscape and work toward your goals under the new tax environment.
SWG4708884-0825a This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives. The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed.
In addition, The Legacy Source specializes in providing strategies and guidance for those seeking a better retirement lifestyle. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence in retirement and beyond. Contact us today to schedule an introductory meeting!
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