A Few Genius Financial Ideas For Year-End

by Scott on December 14, 2010

OK so genius IS a subjective term, but so many times I’ve met with people who could have saved significant tax dollars by just taking some small actions before the clock runs out on the calender year.

1. Consider booking gains or losses in your non-qualified portfolio(ie any account not tax deferred). It’s been a volatile, but overall good year in the stock market and there is a good chance your stocks or mutual funds have made a nice gain. It might be a good time to lock in those gains if you have some carry-over losses from previous years to off-set the tax hit. There is an old saying that ‘profit’ is not a four-letter word! It also may be a good time to dump some losers and book the tax loss, especially if you have already considered re-balancing your portfolio.

2. If you have a 401(k) plan or a SIMPLE IRA you must make all 2010 contributions by December 31st. Individual IRA and Roth IRA’s can be put off until April 15th, and SEP IRAs can actually be funded later for those out on filing extension, but there is a hard deadline on the SIMPLE and 401(K) contributions. I have seen a lot of small business owners with a SIMPLE IRA miss this deadline and miss out on a good deduction.

3. If you are considering converting some of your Traditional IRA to a Roth IRA, this might be a good year to pull the trigger. The quick low down here is that a conversion to a Roth triggers a taxable event, so you pay tax on the money now, but your hard-earned dollars can grow tax-free in the Roth. What is special about 2010 is that you have the option of paying all the taxes now or spreading it over the next two years. We also know that there is pressure to raise individual tax rates to pay off our country’s massive debt, so there may be no better time than the present to consider making a Roth conversion.

4. If your a business owner take a look at your upcoming expenses. Are there items you would rather pay for in 2010 to get the deduction instead of waiting to pay next year. One time I was a member of a networking group and paid my annual dues in advance in December. I had the cash and was able to deduct the full amount in April.

5. Finally if 2010 just wasn’t your year financially, when would NOW be a good time to start planning for a kick-ass 2011! Seriously, start thinking about where you want to be a year from now. Get excited about it, be passionate, and lets hit the ground running into the new year.

I would love to know if you found this useful or if you have your own genius year-end ideas. Drop a comment below and let me know!

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