Financial Must Do Tasks Before December 31

Personal finance and accountingWe are gearing up to close down the year. Have you wrapped up your finances for the year? Here are items you probably want to take care of before the calendar year ends – if they affect you.

Get business expenses paid.

If your business is run on a calender basis (as mine are), you want to get all of your expenses paid out before the end of the year or you might lose beneficial deductions.

For example, record any business mileage you have incurred during the year and write yourself a check from your business to personal account at this years mileage reimbursement rate (for 2014 my accountant tells me that is .56 per mile).

Guesstimate your income for the year.

Mutual funds have a history of posting capital gains and dividend distributions at year end, often surprising account holders with big gains, which can boost you into that next bracket or over a certain limit. It happened to us last year and caused our medicare premiums to go up.

Keep a close eye on December distributions so that you can know whether or not to sell losing stock, do a Roth conversion, or a redemption. You can track online, or estimate based on prior year distributions if you have had the investments awhile.

Make a trial balance of all your income (separated by taxable vs non-taxable but counted by the IRS in some fashion). Do the same for taxes paid. Then you can be prepared to change your withholding if need be and know whether or not you will need to pay estimated taxes for 2014 by January 15, 2015 to avoid a penalty.

Do a Roth conversion.

If you have both a traditional and a Roth IRA, and want to convert some of the assets from the traditional to the Roth, you have until 12/31 to get it done. The converted assets will be taxed at your current tax rate, so if you think you will be in a higher bracket later you might benefit from biting the bullet and paying taxes now so that the principal and the gains can grow tax free. Roth’s currently don’t require minimum distributions when you turn 70 1/2 either! Consider income thresholds (which can cause you to incur tax penalties or additional medicare or Obama care premiums or taxes) and decide if a conversion is for you.

According to a Vanguard rep – if you already have both types of IRA’s set up, the conversion can be done over the phone in a business day (assuming you call early enough in the day).


If you are blessed with more than enough money and want to pass some of it along to heirs, you can give up to $14,000 each to as many people as you want each year. Once December 31 rolls past, you’ve lost the ability to give that year’s money tax free to others.

If you like to give to charities, now is the time to get it done so you can try for a tax deduction for the amount you give.

Sell losers.

If you have investments that you have been wanting to get rid of, consider doing it before 12/31 so the capital loss can offset any capital gain you might receive.

However, don’t just sell to offset a gain. Sell because that is the right thing for you to do.

Take that required minimum distribution from your traditional IRA.

If you are 70 1/2, you generally must take the RMD before year end or suffer the penalty of an extra 50% tax on what you should have taken (additional to the ordinary income taxes you already owe on that amount).

Use up your 2014 flexible spending account money.

It doesn’t all carry over (some employers may allow a grace period into 2015 or allow you to carryover $500, according to the New York Times).

Use it or lose it.

What would you advise folks to do before the year ends?


Financial Must Do Tasks Before December 31 — 2 Comments

  1. Great tips. Along with giving money to charity we should consider donating old clothes and toys as well. You still get a tax deduction and are able to clear out some room at home.

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