Year-End

Nov. 30, 2014

FINANCIAL CHECKLIST

As the calendar pages turn faster and faster, area experts suggest a few things you can do before this year comes to an end that can help make the upcoming tax time a little less painful. First among the suggestions are donating to non-profits, getting organized and, perhaps most important, checking with your tax professional.

John Lohman, a CPA with Dennis, Gartland & Niergarth, says knowledge is the key.

"You have to know your tax situation," says Lohman. "We want to know where you are at, then extrapolate to where you’ll be. There are things you can’t do anything about, some you can."

Among his suggestions is having more money taken from your paycheck, taking less home.

"You can have extra withholding," he says.

Lohman also suggests accelerating your expenses. You may have a choice to pull some expenses into the current year or push them into next year.

As examples, he cites quarterly tax payments and property tax payments. "Your fourth quarter payment–if you pay it by Dec. 31–it’s deductible for 2014," he says. "The same with property taxes. They’re due in February, you can pay by Dec. 31."

Lohman does caution not to get too far ahead in such plans. "You can’t pay property taxes two years ahead."

It is also a good time to take stock of your investments. "There are several things to watch at the end of the year," says Larry Avery, a financial planner with Advanced Financial Group of Traverse City.

While making money from investments is obviously the long-term goal, you may want to look at ways to balance some of your earnings. For example, Avery says excess dividends can be mitigated by losses. "You can sell at a loss to offset some gains," he says.

Jim Mellinger, a financial advisor with Edward Jones, agrees. He says selling at a loss at this time of year can actually have a beneficial effect on your year-end bottom line, and thus, on your tax liability.

"Check your mutual funds for capital gains," says Mellinger. "Then see if those gains can be counterbalanced."

Avery puts it succinctly. "Put the dogs out and capture some losses."

Another area you can consider is your contributions, whether to charitable institutions or to your own retirement plan. "You have control over those," says Lohman.

Lohman says it’s vitally important to make sure that any such donations are approved before filing your taxes. He suggests going online to www.irs.gov for the complete list of allowable organizations. And be sure to get a receipt for those contributions. "If you’re making a

charitable contribution, you have to have acknowledgement," he says.

If you are donating household goods to an organization, Lohman says there are additional rules in place. First, they have to be in good condition. Second, there are guidelines for the value of the items. Organizations such as the Salvation Army and Goodwill post generally accepted values online. For items valued at $5,000 or more, a qualified appraisal is also required.

Contributing to your 401K can also provide tax breaks. While contributions can be made up to April 15, Avery reminds us that, whenever you do it, you need to make the contribution before filing your taxes.

Whatever your situation, organization is key. Dropping a shopping bag full of receipts and paperwork on your tax preparer’s desk is never a good way to operate. The time to start getting organized is now.

"Start categorizing your tax receipts," advises Mellinger.

Mellinger says looking toward the future doesn’t simply mean dealing with April 15. "It’s always a good time of year to meet with your financial advisor to see if you’re on the road to retirement," he says.

Mellinger explains that how you want to retire often determines the question of when. For instance, do you want to downsize or purchase a cottage? Do you want to travel, or move closer to family? "You need to check your goals," he says.

He suggests determining how much you spend, then looking at your savings and checking inflation rates. Extrapolating those figures to your life expectancy can help you determine when and how to retire.

"Everybody’s goal is to retire," says Mellinger. "You should monitor things all year long, but we get more inquiries now. People want to know, "˜How’d I do this year?’ The week after Christmas is pretty busy."

Extra withholding

Accelerate expenses

Take stock of investments

Balance year investment earnings

Consider contributions

Get organized

Meet with your advisor