December is upon us and there are many things to accomplish. Where do we find the time? But, in spite of all of your tasks to be accomplished and their importance, I am sorry but I must add to that list things that really have a greater impact than holiday preparations. Here’s a list of tasks for consideration by year end that will have an impact long after the change of the calendar to a new year:
- If you are of an age that you must take required minimum distributions from a retirement-type account, have you done so? Failure to do so could result in up to a 50 percent surcharge on the amount which should have been distributed.
- If you have had significant medical expenses this year, consider incurring any anticipated medical expenses before year end, i.e., new eyeglasses, hearing aids, prescription refills, payment of any non-covered medical expenses, etc., which may help you to meet the threshold for taking medical deductions as an expense on your income tax returns.
- Review your income tax withholdings so that you can avoid a penalty for underpayment of taxes.
- Consider if it would be advantageous to make gifts of assets which may likely appreciate over time. Gifts of up to $16,000 can be made per person in 2022 without any gift tax impact.
- Make certain your estate plan is up to date. If these haven’t been updated recently, there may have been changes in the law which should be considered.
- Consider whether you should make any additional contributions to your retirement accounts if you are eligible.
- Are you charitably minded? Consider bunching contributions. What you would likely make in 2023, make them in 2022 to possibly enable you to get a bigger deduction for the contributions by being able to itemize deductions.
- If making charitable contributions, consider the use of appreciable assets with a low basis, i.e., stock you acquired long ago that has risen in value. Donate the stock as opposed to selling it and donating cash to avoid the capital gains.
- If you are eligible, consider donating from your IRA to charity using a qualified charitable deduction. This would count toward your required minimum distribution for the year.
- While this last suggestion may not seem to be important, have you checked your beneficiary designations for life insurance and retirement monies to ensure that they are accurate? You may be surprised to see how often these are overlooked and don’t reflect the owner’s intention.
In the meantime, enjoy all of the December festivities.