Hello SOTGC community,
You might be one of those people whose physical fitness level declines during the holiday season with all the parties, food and drink, and family travel. Taking a month off from the gym and returning to your regular routine in January isn’t such a big deal. But in terms of your financial fitness, there are certain things that you should do before the calendar year is over, in order to pay less in taxes come April 15, 2014. Here are two of my favorite year-end financial fitness tips:
1) Add another chunk of money to your 401(k). You can contribute up to $17,500 to your 401(k) for 2013 ($23,000 if you’re 50 or older), and you have until Dec. 31 to reach that limit. Each dollar you contribute now means you will have less adjusted gross income to report to the IRS in April. In addition, if your employer offers a match and you haven’t taken advantage of the maximum, make sure you don’t leave “free money” on the table! Call your HR Department and find out if there is enough time to have the deduction taken out of your last paycheck of the year.
2) Donate appreciated stock to your favorite non-profit. In addition to helping out a great cause, donations to qualified non-profits and charities can reduce your adjusted gross income. One way to get more bang for your buck is to donate stock that has gone up in value, instead of giving cash. With the stock market being close to all-time highs, this month just may be a great time to make that end-of-year charitable donation of stock that you have held for at least one year. Not only do you avoid having to pay tax on the capital gains you would have otherwise realized if you sold the stock, you can take a deduction for the current market value of the stock instead of the lower price you paid for it. It is a win-win for you and the charity and a bag of coal for Uncle Sam.