2019 Year End Planning

2019 Year End Planning

With most of 2019 behind us, now is a great time to consider the following financial planning moves, if appropriate for your circumstances. It is important to make sure you end the year on a positive note and are properly positioned for a successful 2020.

 

Review Your Withholding

Many taxpayers who normally received a refund ended up owing the IRS when they filed their 2018 tax returns as a result of the 2017 tax overhaul that did away with many popular tax breaks. Review your withholdings to help ensure you are withholding a sufficient amount of taxes from your paychecks. Failure to withhold the proper amount could result in penalties. Withholding too much is also not ideal, even though you will get your excess withholdings back in the form of a refund.

Fund Retirement Plans

You still have time to max out your 401k (Dec. 31, 2019 deadline) and your IRA’s (April 15, 2020). The chart below outlines the contribution limits for 2019 and the subsequent increases, if applicable, for 2020.

 

 

Capital Gains/Capital Gains Distributions

Over the course of the year, as trades were placed in your account for various reasons, positions that appreciated in value may have been sold, resulting in a capital gain. If this occurred in a taxable account, taxes will be owed on these gains. In a similar light, mutual funds are required to pay out to their shareholders, any gains they realized on the sale of stocks or bonds during the year. If you own these mutual funds in a taxable account, taxes will be owed on these distributions.

 
Fund your Health Savings Account

HSA contributions are made using pre-tax income. These contributions are also tax deductible and any earnings in the account are tax-free. Withdrawals from HSA’s will not be taxed if they are used to pay for qualified medical expenses. The contribution deadline is the April tax deadline, without extensions.  Confirm with your current health insurance plan to find out whether you are eligible to participate in an HSA. The chart below outlines the contribution limits for 2019 and the subsequent increases, if applicable, for 2020.

 

 

As we finish 2019, now is a great time to review this past year from a financial standpoint and make any changes necessary, including the items mentioned above, to put yourself and your family in a better financial position for 2020.

As always, if you have any questions specific to your situation please do not hesitate to contact us.

Sources: Forbes, Kiplinger

*This article is provided for informational purposes only and should not be interpreted as investment advice.