End-of-the-Year Money Moves in 2021

What has changed for you in 2021?

For some, this year has been as complicated as learning a new dance. Did you start a new job or leave a job behind? That’s one step. Did you retire? There’s another step. If notable changes look place in your personal or professional life, then you may want to review your finances before this year ends and 2022 begins. Proving that you have all the right moves in 2021 might put you in a better position to tango with 2022.

Even if your 2021 has been relatively uneventful, the end of the year is still an excellent time to get cracking and see where you can manage your overall personal finances.  

Keep in mind that this article is for informational purposes only and is not a replacement for real-life advice. Please consult your tax, legal and accounting professionals before modifying your tax strategy.

Do you engage in tax-loss harvesting?

That’s the practice of taking capital losses (selling securities for less than what you first paid for them) to manage capital gains. You might want to consider this move, but it should be made with the guidance of a financial professional you trust.¹  

In fact, you could even take it a step further. Consider that up to $3,000 of capital losses in excess of capital gains can be deducted from ordinary income, and any remaining capital losses above that amount can be carried forward to offset capital gains in upcoming years.¹

Do you want to itemize deductions?

You may want to take the standard deduction for the 2021 tax year, which has risen to $12,550 for single filers and $25,100 for joint. If you think it might be better for you to itemize, now would be a good time to gather the receipts and assorted paperwork.^2,3

Are you thinking of gifting?

How about donating to a qualified charity or non-profit organization before 2021 ends? Your gift may qualify as a tax deduction. For some gifts, you may be required to itemize deductions using Schedule A.⁴

While we’re on the topic of year-end moves, why not take a moment to review a portion of your estate strategy? Specifically, take a look at your beneficiary designations. If you haven’t reviewed these designations for some time, double check to see that these assets are structured to go where you want them to go in the event that you pass away. Lastly, look at your will to make sure it is still valid and up-to-date.   

Check on the amount you have withheld. If you discover that you have withheld too little on your W-4 form so far, you may need to adjust this withholding before the year ends.

What can you do before ringing in the New Year?

New Year’s Eve may put you in a dancing mood, eager to say goodbye to the old year and welcome 2022. Before you put on your dancing shoes, though, consider speaking with a professional. Do it now, rather than in February or March. Small end-of-year moves might help you improve your short-term and long-term financial situation. Give us a call at Evergreen Financial Group and we can help you understand what could be beneficial for your situation. 

Spiritual Application

We live in a world full of deadlines, cutoffs, and time crunches. It is easy to live our lives dominated by the ticking clock. However hectic it may seem, it is important to understand what deadlines are most important and what we can let go by the wayside. Prioritizing these demands will lead us to being more organized, efficient, and better suited to meet deadlines as they come. And, if something unexpected happens in our lives, we are able to adapt and adjust our plans accordingly. 

The Bible tells us to how to act in dealing with these situations. Ephesians 5:16-17(NLT) says, "Make the most of every opportunity in these evil days.  Don’t act thoughtlessly, but understand what the Lord wants you to do." Through this combination of careful prioritizing and being intentional about the opportunities we act on, we will come out on the winning side much more than the losing. Sound a lot like financial planning? I thought so too.

Evergreen Financial Group is a Fee-Only Financial Planning and Investment Firm located in Billings, MT serving clients in Montana, Wyoming and virtually across the country. Evergreen Financial Group specializes in working with Christian families, including young professionals, Current and Future Retirees and Church Staff Members.