With the end of the year less than a month away, I thought I’d put together a list of five money moves to make in the next few weeks. If you have any suggestions of your own, please be sure to post them in the comments.
1. Spend out your Flexible Spending Account. While you typically have until sometime early next year to make claims against your FSA, eligible expenses actually have to be incurred this year. So if it looks like you’ll end up having money left over at the end of the year, it’s time to get creative. Buy a new pair of glasses, stock up on eligible non-prescription medications, etc. If you don’t, you can kiss that money goodbye.
2. Make your 529 contributions for 2007. In case you’re not aware, contributions to 529 college saving plans need to be made by December 31st if you want them to count for this year. The reason for this is that 529 contributions are subject to the annual gift tax exclusion, meaning that a donor can contribute up to $12k to an individual each year without having to deal with gift taxes. The same goes for Education Savings Accounts (ESAs) — technically, you have until April 15th to make your contribution to an ESA, but such contributions are subject to the gift tax so making it before the end of they year has its advantages.
3. Modify retirement contribution amounts for 2008. I actually just did this two days ago. We got a late start on our maxing out my 403(b) and 457(b) last year, so our monthly contributions have been a bit on the high side. Thus, I turned in the paperwork to adjust them down a bit for 2008. With the holidays looming, this isn’t something that you want to leave until the last minute — in fact, my employer’s HR office closes down on December 21st and doesn’t re-open until after the New Year.
4. Charitable donations. This should go without saying, but December 31st is the last day to make charitable contributions and be able to deduct them from your current year’s taxes. So don’t leave things to the last minute like we did last year — if you do and any problems crop up, you won’t have time to get things straightened out.
5. Clean out the house. This should probably be lumped in with charitable contributions, but it’s cathartic enough that I thought I’d split it out on its own. Every year around this time we get serious about cleaning out our closets, the garage, etc. and donating our extra stuff to charity. Part of out motivation for doing this is to start the New Year with a clean slate, but an equally important part of our motivation is to capture a nice tax deduction before the year ends. Just be sure to get a receipt!
Like I said above, if you have any suggestions of your own, please add them in the comments.