What has changed for you in 2022?
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 took place in your personal or professional life, then you may want to review your finances before this year ends and 2023 begins. Proving that you have all the right moves in 2022 might put you in a better position to tango with 2023.
Even if your 2022 has been relatively uneventful, the end of the year is still an excellent time to get a jumpstart on 2023 and make sure you are best positioned to begin the new year on the right financial foot.
Do you engage in tax-loss harvesting?
Tax-loss harvesting is the practice of taking capital losses to manage capital gains. If your losses exceed your gains, up to $3,000 of losses can be used to offset ordinary income, with the rest carrying forward to offset capital gains in future years. Consult a tax or financial professional for further guidance on how to engage in this strategy.1
Do you want to itemize deductions?
You may want to take the standard deduction for the 2022 tax year, which has risen to $12,950 for single filers and $25,900 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
Are you thinking of gifting?
How about donating to a qualified charity or non-profit organization before 2022 ends? Your gift may qualify as a tax deduction. For some gifts, you may be required to itemize deductions using Schedule A.3
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 2023. Before you put on your dancing shoes, though, make sure you speak with your financial or tax professional. Do it now, rather than in February or March. Small end-of-year moves that you do now will decrease or even eliminate the amount you'll have to do later.
As the old saying goes, "an ounce of prevention is worth a pound of cure." There is little more satisfying than seeing a potential issue that would have normally grown into a bigger problem only fizzle away because of proper planning and preparation. In a spiritual sense, taking the time to align our own goals and finances with what how God would like us to steward them can reap some natural rewards. Case in point - are you considering giving a year end gift to your church or maybe another ministry-aligned organization? Did you know that a gift of appreciated securities from your non-retirement investment portfolio is usually a better after-tax gift than just cash?
Job 11:12-13(NLT) says, "An empty-headed person won’t become wise any more than a wild donkey can bear a human child. If only you would prepare your heart and left up your hands to him in prayer!" The more intentional we are with not only our natural finances, but our conversation and fellowship with God, the more he will lead us into what he desires for us to do with every area of our life. And the rewards found in proper relationship with God are more than any natural investment will ever produce.
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.
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