Year End Financial Actions for People Staying in US

Check out the post title “15 Year-End Financial To-Do’s” from Yahoo Finance. Although the list is specially written for US residents, but I’m sure some of the issues are commonly apply to other countries. It’s basically making full use of the yearly taxation benefits. Now let’s take a look at the 15 to do list provided by the article.

  1. Fund your IRA or Roth IRA. For 2010, investors can add up to $5,000. If you’re over age 50, add an additional $1,000.
  2. Maximize 401(k) contributions. For 2010, savers can add up to $16,500 to their company’s 401(k) plan. If you’re over 50, add an additional $5,500.
  3. Rebalance investments. Rebalancing is selling part of what has done well and buying what has not done so well, thus selling high and buying low.
  4. Review portfolio quality. Look at the rankings of the investments in your portfolio and keep the quality high. Don’t hold onto any low-quality investments.
  5. Review the tax impact of your portfolio for the year. Now is the time to make any changes to offset portfolio taxes. This needs to be done in 2010 to impact your tax bill in 2011.
  6. Review your financial plan. Make sure you are hitting your goals by looking at your results compared with your financial plan. If you don’t have one, complete a financial plan prior to year end.
  7. Contribute to your child’s or grandchild’s 529 plan. You may be able to get a 2010 deduction from state taxes.
  8. Convert your IRA to a Roth IRA. You’ll be able to pay the taxes over two tax years, 2011 and 2012.
  9. Take out your minimum required distribution. If you’re over 70 1/2, you must take your MRD in this tax year. If you don’t, the penalty is 50 percent.
  10. Get married. If you are planning on getting married without the hoopla, do it now to receive tax benefits.
  11. Review your credit record. Check to see if you have any blemishes on your credit record. You are eligible for one free credit report a year.
  12. Make an extra mortgage payment. One extra payment a year can reduce your 30-year mortgage by seven years.
  13. Pay your state taxes this year. If you do, you may be able to get a deduction.
  14. Calculate your net worth. Each year it is a good idea to see the value of all your assets and review your annual progress.
  15. Develop your 2011 budget. Building a budget can be the best way to meet your financial goals. Putting it down on paper is the first step.

Most of the suggestions are applicable except item no. 10 which is getting married. You have to be sure that you’re marrying the right partner and don’t rush things. It is true that you’ll get lots of tax benefits but you’ll lose a lot if you end up divorce. So think carefully.

This is just an example of what you can make use of yearly taxation benefits and some of the financial plan given by the US government. If you’re staying in country other than US, check back your previous tax form. I’m sure there are several items which your government designed specially to help reduce your tax. Review the items and see if you miss out any benefits. One of the plans that my government imposes is tax reduction from purchasing books and magazines. This is one special plan that government trying to encourage the habit of reading among public.

P/S: When you’re into business and working towards an entrepreneur, you have to be sensitive with the benefits and tax reduction given by your government. It’s not just about personal financial planning, but also business financial planning too.

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2 Responses to “Year End Financial Actions for People Staying in US”

  1. Carl says:

    My accountant is taking care of everything, but I am not sure that she is 100% aware for all this points. I am going to speak with her tomorrow.

  2. Tax Calculator Guy says:

    One thing you might also like to do is estimate your next years taxes. it might make sense to do your charitable donations you were planning to make this year next year, or vice versa, depending on your tax liabilities.