Important Year-End Financial Planning Actions To Take

Posted By: Jeremy Reif
Mon, May 18, 2020
Important Year-End Financial Planning Actions To Take

Believe it or not, it’s almost a new decade! But before we jump ahead to the new year, think about what changed for you in 2019. Did you start a new job or launch a new business? Did you welcome your first (or second) child into the world? Did you celebrate retirement? Or maybe your year was relatively uneventful, but you saw some changes in your debt load, or you were given a raise.

Whatever changes you experienced, likely affected your finances in some way, shape, or form. The end of the year is the ideal time to review your financial plan and make some adjustments. Here are 5 critical financial actions you’ll be glad you tackled when the ball drops on New Year’s Eve!

1. Decide If You Want To Itemize

With the new tax law in place, the standard deduction is now $12,200 for individuals and $24,400 for married couples filing jointly. But if you want to itemize and are coming in under the standard deduction amount, you need to take action soon. But deciding if you’re going to itemize is a bit more complicated since the Tax Cuts and Jobs Act (TCJA) was implemented. The TCJA eliminated many standard deductions, including miscellaneous deductions for tax preparation fees, investment expenses, home office expenses (unless you’re self-employed), and unreimbursed employee business expenses.

Plus, it also capped the deduction for state and local income tax (SALT) at $10,000 and limited the home mortgage interest deduction to acquisition indebtedness up to $750,000 in mortgage loan interest (for new mortgages taken out since 2018). And if you have medical bills to throw into the mix, the floor for unreimbursed medical expenses, which was temporarily lowered to 7.5% of adjusted gross income (AGI) for tax years 2017 and 2018 only, reverted to 10% of AGI in 2019. 

If you know your deductible expenses will exceed the new standard deduction amounts, then you’re good. But if you want to itemize and are coming in under the standard deduction amount, you need to take action soon. For example, you could write a check to a charity or deposit it into a donor-advised fund. You can also prepay your property taxes that accrued this year but aren’t due until sometime in 2020.

2. Adjust Your Tax Withholding

The W-4 you filled out with your current employer could no longer be relevant. Maybe you had dependents when you started your job five years ago, but now your children have moved out of the house. Or maybe you were single, but now you’ve been married for a while. If you’ve withheld too little, then you may get hit with a tax bill next year. Check out the new IRS Tax Withholding Estimator to compare how much you’re withholding to how much you should be withholding.

3. Give Your Retirement Savings A Boost

If possible, max out your contributions to your 401(k) by the end of the year to make the most of your retirement savings. For 2019, you can contribute as much as $19,000 (or $25,000 if you are age 50 or older). Remember, these are your contribution limits, and any employer match is on top of this amount. You might also consider contributing to a Roth IRA. For 2019, you can contribute as much as $6,000 (or $7,000 if you are age 50 or older). Finish the year strong by investing in your future!

4. Talk to Your Advisor About Harvesting Losses

If you invest in bonds, mutual funds, or stocks in accounts other than your 401(k) or IRA, review your realized and unrealized gains and losses. You might be able to offset some of your gains by selling some losses and thus lower your taxable income. And if you live in a high-tax state, you may want to defer tax by deducting up to $3,000 of capital losses in excess of capital gains and carrying any leftover capital losses forward into future years.[1]

Tax-loss harvesting can help you save on taxes, but you want to make sure the move also makes financial sense for your situation. Talk with your advisor about potentially harvesting your losses and if it makes sense for you. Should you determine tax-loss harvesting is appropriate, you’ll need to complete it by December 31st.

5. Review Your Gifting And Estate Plans

If you have taken the time and energy to create an estate plan, you’ll want to check in periodically to ensure all the documents are up to date and no major details have changed. Any significant life event is a good time to think about updating your estate plan documents. If you change any of the beneficiaries in one place, such as a life insurance policy, make sure that they are consistent with the other documents so that there is no confusion.

If gifting is one of your long-term financial goals, it’s never too early to start planning for the legacy you want to leave your loved ones without sharing a good portion of it with Uncle Sam.

Each year you can gift up to $15,000 to as many people as you wish without those gifts counting against your lifetime exemption of $11.4 million. If you’ve yet to gift this year or haven’t reached the $15,000 limit for a particular recipient, make sure you do this by December 31st.

If you’re planning to itemize deductions on your 2019 tax return, be sure to make your charitable contributions before the end of the year. This includes donating appreciated securities, which may help you avoid paying taxes on the gains. Along with your other tax documents, find and organize any receipts you have from donations to charities, whether made in cash, as a securities contribution, or other types of gift.

Get Started Now!

Do you need to take any of these steps before the ball drops on New Year’s Eve? I’d love to help point you in the right direction and take action on your financial goals. If you want to finish the year off strong, schedule a call and meet me virtually.



About Jeremy Reif, CRPS®
Jeremy Reif is an independent financial advisor with more than a decade of experience in the financial services industry. He is also the owner of Point Wealth, LLC, an independent financial planning and investment management firm. With advanced credentials and training in retirement planning and financial planning, Jeremy focuses on helping individuals and families pursue financial independence. Regardless of the services he’s providing, he focuses on talking openly about financial planning, the industry, common questions about retirement planning, and more to help everyday investors gain more confidence in their financial opportunities. Based in Wausau, Wisconsin, Jeremy serves clients throughout the state and can work virtually with clients throughout the country. To learn more, visit and connect with Jeremy on LinkedIn.
Advisory services are offered through Point Wealth, LLC, an Investment Advisor in the State of WI. Whenever you invest, you are at risk of loss of principal as the market fluctuates. Past performance is not indicative of future results. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.
Point Wealth, LLC is not affiliated with or endorsed by the Social Security Administration or any government agency.
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