Your Financial Year’s End Checklist

November 14, 2018

Your Financial Year’s End Checklist

November and December are the two months of the year that it seems like we all hit the fast-forward button on. Family gatherings, grandiose holiday dinners, and general end-of-year tasks leave us with calendars packed to the brim. Amidst all the holiday hubbub you might try to get your house into a (somewhat) organized shape, finally make that doctor or dentist visit that you’ve been putting off the entire year, and ultimately get the ball rolling on some plans you have for 2019.

At our office, the holiday season is admittedly less hectic compared to the rest of the year. Most people aren’t thinking about their financial portfolio; they’ve got side dishes to prepare and gifts to wrap. Nonetheless, every time January rolls around it suddenly hits everyone that tax season cometh. I’ve seen many clients in a panic thinking there’s no way they’ll get everything handled by April, wondering what they could’ve done to save themselves a paperwork overload.

Realistically, I know no one really wants to think about taxes or market predictions while surrounded by good food and friends. Personally, I’ve got a grandkid on the way and boat trips to plan for the coming year, so I understand holiday distractions! There’s a giant list of things I could say we all “should do” to prepare for next year…but you likely don’t have the time for 99% of those things, and then just end up doing none of them.

This week, I want to hit on the most important steps you can start taking now in order to avoid a headache come tax time. I know that the holiday season means we have packed schedules, but if you can make time to follow the tips below, you’ll be thanking yourself come January.

  • If you plan on making a qualified charitable distribution, get to it. You have until December 31st to send your distribution directly from your IRA to a qualified charity in order to count them on next year’s tax return, thereby adjusting your gross income.
  • Make an appointment with your CPA or financial advisor to discuss seeing if it might be beneficial for you to convert your traditional IRA to a Roth IRA, otherwise known as a Roth conversion. Thanks to the 2017 Tax Cuts and Jobs Act which introduced a cut in individual tax rates, many retirees have found a Roth conversion ultimately saves their accounts a substantial amount come tax time.
  • While you’re in that appointment with your advisor, get a general feel for how the numbers look in 2019. Inflation continues to grow every year; right now, it’s estimated that the value of the dollar has plunged 34% since 2000—this means that what used to buy $100 worth of goods can now only purchase about $66 dollars.1 Having a general idea of what to expect in 2019 can give you a better idea of where you stand, and if there’s anything you need to be prepared to handle in the coming year. At the end of the day, you’ve got to have a strategy to handle yearly inflation—if not, it’ll have one for you.
  • Finally, review your bank statements for the year and see how your budget panned out. This is certainly the most time-consuming tip, but also one of the most important. If you notice that a lot your yearly income went to eating out, shopping, or spur-of-the-moment excursions, then evaluate if you’re comfortable with that number. If it seemed okay for you, great! If not, that’s okay too because you can now start thinking of how to adjust for the following year.

See? Not so bad. These four items can theoretically be knocked out in one day if you have the patience for it or spread out a little each week as we work our way to January. Ultimately, I just want everyone to keep in mind that the worst way to start off the new year is saying “I wish I had done xyz in the past”. If you follow these tips, you’ll be able to focus on your new 2019 financial goals, rather than ask yourself what you did with all of 2018.