December is a month of traditions — a chance to enjoy parties, holiday sweets and celebrations that come only once a year. But it’s also the last month of the tax year, and that means it’s your final opportunity to take stock of your finances and make contributions or donations that could have a significant impact on what you’ll owe in taxes.

That’s why Jessica Lubar, director of advanced planning at Northwestern Mutual, suggests that you create a new tradition and set aside some time in December to evaluate your finances.

“This month is a great time to take stock and see where you’re at,” she said. “You don’t need a crystal ball to see what situation you are going to be in. You know your income and expenses to this point, so you’re able to see what you should do before December 31.”

  1. MAKE ADDITIONAL CONTRIBUTIONS TO YOUR RETIREMENT ACCOUNTS

    It’s important to make additional contributions to your qualified retirement accounts before the end of the 2016 tax year for a few reasons.

    “You’re limited annually on the amount that you can give, so if you haven’t given all that you can for this particular year,” Lubar said, “you can’t necessarily make it up in another year when you might already be contributing at the max.”

    By contributing as much as you can each year, you also help ensure you have enough saved for retirement and your contributions have time to grow via compound interest. The contribution limit in 2017 is $5,500 toward an IRA ($6,500 if you’re 50 or older) and up to $18,000 in employee contributions toward a 401(k), 403(b) or 457 if you’re under age 50 ($24,000 if you’re 50 or older).

    But it’s also important to max out your retirement contributions to reduce your tax bill. “You still have an opportunity in December to get deductions to decrease your total adjusted gross income for the year,” Lubar said. Retirement contributions to IRA and 401(k) accounts are a great way to do this and can reduce how much tax you’ll owe or could even ensure you get a refund.

  2. CONTRIBUTE TO A 529 PLAN

    If you’re saving for your children’s education in a 529 Plan, the end of the year is a great time to consider making an extra contribution. Each parent or grandparent is eligible each year to gift up to $14,000 to a child tax-free, and those contributions could also lead toward a state tax deduction or credit. Thirty-four states and the District of Columbia offer a full or partial state income tax deduction for 529 Plan contributions. In addition, by making annual contributions, you allow the money more time to grow tax-free.

    “The cost of college is getting more expensive,” said Lubar, “so you want to maximize the amount that you get in your 529 Plan as early as possible.”

    Are you able to contribute more than $14,000? If you’re putting the money in a 529 Plan, Lubar says you can use up to five years of gift tax exclusions at one time — meaning you can put up to $70,000 into the account at once, instead of contributing $14,000 over five years.

  3. SELL STOCKS

    Do you have some capital gains you need to offset? Lubar suggests you consider selling stocks in which you have lost money to balance out your earnings. “Selling stocks that have lost money at year-end allows you to capture losses,” she said. “These can be used to offset capital gains so that you’ll owe less tax.”

    Just be careful if you want to buy back the stock later, as you will need to wait at least 30 days to do so or your previous sale will be considered a “wash sale” and the IRS won’t count it as a capital loss.

  4. MAKE CHARITABLE CONTRIBUTIONS

    December is often a time when we think about helping others. If you’re considering giving to charity, be sure to get your donation in before December 31 so that it can count toward the tax year. “When you are looking at your year-end finances,” said Lubar, “charitable deductions can help you reduce your taxable income and minimize your taxes.”

  5. You don’t need a crystal ball to see what situation you are going to be in. You know your income and expenses to this point, so you’re able to see what you should do before December 31.
  6. WITHDRAW YOUR REQUIRED MINIMUM DISTRIBUTION

    If you’re currently retired and over 70½ years of age, you are required every year to take out a minimum amount from your IRA, SEP IRA, SIMPLE IRA or other retirement plan account.

    “Make sure to look at whether you have taken your requirement minimum distribution for the year,” said Lubar. “If you haven’t, you could be hit by a penalty.” That penalty is hefty — the amount you didn’t withdraw could be assessed with a 50 percent excise tax. If you were planning on making a charitable contribution this year, Lubar suggests you consider using some of your required minimum distribution to do so.

    “You can distribute up to $100,000 directly from an IRA to a qualified charity, and that amount is not included in the taxpayer’s income,” she said.

While you should be tax planning throughout the year, sometimes you don’t know exactly how much you’re going to earn or you get busy and forget to make the contributions you intended on making.

“Taking stock in December gives you a chance to take affirmative steps toward making sure that you’re achieving your goals and planning well for your financial future and for tax season,” Lubar said. While December is often a busy month, making the time to take care of these financial obligations will ensure that you’re in a great place to ring in the new year.

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