By: Portia Rose, Senior Manager, Mazars USA LLP
Now that it’s fall, many people’s thoughts turn to Halloween and the how we can fit in even more pumpkin spice . Some of us even start working on our holiday lists! But before you finalize your plans, we’d like to add a few things you can do before the end of the year with your CPA in mind. As with most things, it’s better to be proactive with your financial situation and plan not just for the end of the year, but well into the future. These end-of-year ideas will not only help when you meet with your CPA early in 2020, but will lay a good foundation for years to come.
- Clean out your closet and donate things you haven’t seen or used in the past year. Not only will this create space, you can get a tax deduction equal to the thrift shop value for the charitable contribution. There are organizations out there who will even come to your house and pick up the hockey gear your teenager has outgrown. Be sure to get a receipt from the donee organization
- Sign up to be an organ donor – there are no tax benefits for doing it, it just helps.
- Make an extra principal payment on your mortgage. The extra payment will drastically reduce your overall interest expense over the lifetime of the loan.
- If you received a bonus, or are about to, consider increasing your 401k contribution.
- Start a college savings plan and set up regular contributions for your children, grandchild, or your favorite niece or nephew. Contributions to a 529 college savings plan in New York and Connecticut reduce state taxable income and the earnings grow tax free. Distributions are also tax free if they are used for education expenses.
- Check your credit score. With the security breaches that seem to be happening almost weekly, now is a good time to review your score and correct any errors on it. At the same time, consider changing your passwords. One easy way to change a password that is strong (and be able to remember it) is to use a favorite phrase and use a symbol for one or two letters. “H@ppyCP@!” for example.
- Sign up for a painting or cooking class. Not only is this inspiring and expands your social network, you can make your own holiday gifts this year! The money saved on presents can be used to start that college savings plan, see #5 above. And, you never know, your recipe for vanilla sugar syrup might just be the next sensation and you can work with your CPA on how best to start your new business.
- Return that phone call from your friendly CPA. They will have some year-end tax saving ideas for you. And if you don’t receive a call, maybe it’s time to find a new CPA.
The professionals here at Mazars are available and are constantly looking for tax saving and tax planning ideas to share with their clients. Take the time and call us today.