facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
Take Care of These 5 Tax Tasks by Year-End Thumbnail

Take Care of These 5 Tax Tasks by Year-End

Around the holidays you often see articles about things you absolutely must do now before the year ends. Yet by Thanksgiving, the year is already almost over! When are you supposed to fit in anything new around year-end work deadlines, family visits, and preparations for holiday parties and gatherings?

From a financial perspective, there really are some things you need to do before December 31 to gain certain benefits or avoid penalties. We wanted to share these items early, while there is plenty of time to achieve them without having to rush. As always, please speak with your CPA for details on whether these items are appropriate for your individual situation.

(And if just the mention of financial tasks makes you snooze, start with our post from last year: “5 Financial Year-End To-Dos You’ll Actually Be Excited to Do.”)


(photo used under public domain)

1. Talk to your CPA before the busy tax season.

He or she can help you to determine if you have paid enough in state and federal taxes for 2016. If you haven’t, you may face a penalty if you do not pay by December 31.

2. Use your bonus to maximize your salary deferral.

By this point in the year, you should have an idea if you will max out your workplace retirement saving by the end of the year through your regular monthly saving. The maximum contribution is $18,000 per year, plus an additional $6,000 per year if over age 50. If you receive a bonus or raise and your saving level is still under these limits, consider using these funds to maximize your tax-deferred savings. (You may need to check with H.R. to confirm that you are able to divert part or all of a bonus to your workplace retirement plan.)

3. Contribute to charity.

If you would like your charitable giving to be considered tax-deductible for the year of 2016, you must make these gifts before December 31. There are several other factors to keep in mind to make the most of your tax-deductible gift, including keeping track of receipts and value.

4. If you are self-employed or a small business owner: set up a retirement plan.

If you are self-employed or a small business owner, creating a tax-deferred retirement plan has dual benefits: it may reduce your tax liability as a business and it gives the benefit of tax-deferred investment growth for you and your employees. You have  a few options, and two of them would require your attention before the end of 2016.

  • Solo 401(k): A plan for sole proprietors and very small businesses. A solo 401(k) must be created by December 31, but you have until April 15 of the following year to fund the plan.
  • SEP IRA: A plan where employers make all contributions at a set percentage, but there is no minimum required contribution. This offers some flexibility if there is a year with cash flow issues, but it may be expensive if you have multiple employees. You have until your tax filing deadline to fund the SEP IRA, but start to plan for this spending now.

5. If you have children: Fund 529 Plans, and make sure you are reimbursed properly for educational expenses. 

If you have children and are saving for college expenses, a 529 Plan is a very powerful tool. Contributions are often state tax-deductible (depending on your plan and the state you live in), and withdrawals are tax-free for qualified educational expenses. In order to get any 529 Plan tax incentives for 2016, though, you must fund 529 plans before year-end.

There is another year-end task for 529 Plans if your child is in college and you are making withdrawals from the plan. Withdrawals from your 529 account must match up with qualifying expenses in the same calendar year. This can be confusing, especially for the spring semester, when you might receive the bill in December, but the expenses technically occur starting in January of the next year.

You must make sure that any qualified expenses paid in a particular calendar year are reimbursed in that same calendar year.  For example, if you pay spring tuition in December, then you must request a reimbursement from the 529 plan in December. Remember to keep records of these expenses for your accountant and personal tax records.

The team at Halpern Financial is happy to answer any questions about how these items might fit in with your overall financial plan. But just as we wouldn’t try to fix your car or write your will, we are not tax specialists and this article should not be considered tax advice. We encourage you to speak with your CPA who has specialized knowledge of your individual tax situation! 


Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Halpern Financial, Inc.), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Halpern Financial, Inc.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Halpern Financial, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Halpern Financial, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request. Please Note: Halpern Financial, Inc. does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Halpern Financial, Inc.’s web site or incorporated herein, and takes no responsibility therefore.  All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.