Financial Items to Check Off Your List Before the End of the Year

December 15, 2014 12:00 am

Christine H. Canapari, ChFC®

Senior Financial Advisor & Manager of Client Services

It’s hard to believe that another year has gone by, but here we are in the final weeks of 2014.  Although this time of year is undoubtedly filled with celebrations, shopping and holiday festivities, it’s also time to take a last look at your finances before the end of the year to make sure you are taking advantage of money saving opportunities before they are lost.  Here are my top five areas that should be addressed before you ring in the new year.

Max Out Retirement Contributions
You may only have one or two pay periods left before the end of the year.  If you haven’t maxed out your 401(k), 403(b) or other employee savings plan yet, now is the time.  The maximum 401(k) contribution for 2014 is $17,500 with an additional catch-up allowance of $5,500 for investors age 50 or older.  Unlike Traditional or Roth IRA contributions that can be made up through April 15th for the previous year, 401(k) and 403(b) contributions are based on a calendar year.  Working with your human resources department should allow you to make the changes necessary to reach the maximum contribution for the year.  In general, I recommend spreading out the contributions throughout the year especially for budgeting purposes, but I realize calculating exactly sometimes becomes difficult if you aren’t paid by salary only.  Check your contribution amounts throughout the year and make adjustments as necessary.

Medical and Health Planning
There are three areas to consider with medical insurance and health care.  The first area is dependent on whether your health insurance coverage runs on a calendar year and has a deductible and determining if you have met you deductible for the year.  If your deductible is met, you may want to consider having any medical tests or procedures done before the end of the year, so that they will be covered under your plan rather than waiting until next year when your deductible resets.  Planning in this area is particularly important as high deductible health plans become more typical.  The second area depends on whether you will be able to deduct your medical expenses for income tax purposes.  A similar type of strategy applies here.  If you know that your medical expenses are going to qualify for an itemized deduction, you may want to go ahead with making that purchase of medical equipment or having that procedure or test you have been delaying done now because you know you will be able to deduct it.  The last item in this group will pertain to you if you make use of a flexible spending account (FSA).  If your plan does not offer one of the new provisions that allow you to either carry over (up to $500) or a grace period (2 ½ months) option, then you need to spend down the funds in your FSA or you will lose them.

Use Capital Losses to Offset Gains
This step is particularly important in times like the present where the market has been on an upward trajectory for a number of years.  If you have capital losses for the year or are carrying forward losses from previous years, you may want to consider selling highly appreciated positions and others in order to utilize those losses and offset capital gains.  You or your advisor may have been reviewing these gains and losses throughout the year but December is a great time of year to take one last look to see if this makes sense for you.  Like many financial decisions, avoiding taxes should not be the sole reason to act.  Clearly, evaluating your particular holdings and the reasons you own them should also be considered.

Charitable Giving
The holiday season is a great time to share with others.  Not only is charitable giving very gratifying for the giver but it may also provide income tax savings if you itemize deductions.  Donations made to qualifying charities or organizations are eligible, but donations made to individuals are not deductible.  Be sure to keep detailed records of your donations.  Most charities will provide written documentation of your donation amount for tax purposes.  Donating highly appreciated stock can also be a highly tax efficient way to give.  Capital gains tax on the stock is avoided while also obtaining a deduction for the donation.

Gifting will not immediately save you money on taxes but could provide tax savings to your estate in the future.  If your estate is large enough and will be subject to estate taxes at your death, gifting is a valuable method to employ now to reduce your estate.  There is an annual limit to the amount that you may gift an individual so that the gift is not subject to gift taxes.  For 2014, the limit is $14,000 per person.  You may make as many gifts as you like, and they will not be subject to gift or estate tax as long as they are within the annual exclusion gift limit.  There is one exception to the annual exclusion and that is for direct payments made for someone’s medical bills or school tuition.  There is no limit to the amount you may pay for someone’s medical bills or tuition as long as the payment is made directly to the institution.  Gifting can be a rewarding way to help loved ones and save on future potential tax costs.

It’s easy to see that with all of these financial tasks that planning is the key to ensure you are utilizing all of your money saving strategies to the fullest extent.  Take the time now to establish your goals for next year and map out your personal action plan for 2015.  It’s not too late to take advantage of opportunities this year if you act fast.  Happy holidays!

Chrissy Canapari serves as Financial Advisor and Manager of Client Services at StrategicPoint Investment Advisors in Providence and East Greenwich. You can e-mail her at

The information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Chrissy’s opinions and comments expressed on this site are her own and may not accurately reflect those of the firm. Third party content does not reflect the view of the firm and is not reviewed for completeness or accuracy. It is provided for ease of reference.