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The Twelve Financial Tips of Christmas Thumbnail

The Twelve Financial Tips of Christmas

We hope you and your families are blessed, healthy, and are enjoying the holiday season. These 12 financial tips can help motivate your new investing strategies and help you save for the New Year.

This Christmas, give the gift of financial confidence and tax deductions to you and your family by maximizing your retirement savings. An important aspect of reaching your retirement goals is your retirement contributions, and many investors are not saving enough.

Get a little more into your retirement accounts before the end of the year, or if times are tight in 2022, consider increasing it now for next year.

Check your mutual funds and investment accounts in December to get an idea of your capital gains for 2022. Harvesting losses might not only offset all your capital gains, but you might even be able to deduct up to $3,000 of losses against your income. This is one of the few silver linings to the down market we have seen this year.

Beware of Social Security and Medicare income thresholds. As a retiree, you need to keep a close eye on these. If you unknowingly cross one of these thresholds, you could get a Grinch surprise in your stocking next year: higher Medicare premiums or a smaller Social Security check!

While Santa Clause is MIA on Wall Street this year, you might consider a Roth conversion for your Individual Retirement Accounts. A conversion moves your account from pre-tax to post-tax status.

Converting all or part of your account and paying the taxes while the account value is lower could save you a ton in the long run.

Accelerate your charitable giving for 2023 by lumping it in with your 2022 donations. Recent changes in tax rules (an increase in the standard deduction) may mean you won’t be eligible to itemize your charitable deductions unless you lump two years of giving into one calendar year. 

And, if you are retiring in 2022, you may find giving this year lowers your taxes more than it would in 2023. We can work with your tax advisor to review your giving strategies to help you maximize your deductions.

If you are over 72, the government requires you to make a Required Minimum Distribution (RMD) based on the aggregate balance of all Qualified (retirement) accounts. In addition to your standard retirement accounts, this also includes accounts such as Qualified Annuities.

Your first RMD must be taken by April 1st of the year after you turn 72. Subsequent RMDs must be taken by December 31st of each year. If you underestimate your RMD requirement, you’ll be paying a 50% tax on the amount not withdrawn.

If you are over 70 ½, donate a portion (or all) of your Required Minimum Distribution (RMD) directly to your favorite charity via a Qualified Charitable Distribution (QCD). If the RMD is used as a QCD, it is excluded from your taxable income. An individual can give up to $100,000 per year in QCDs. Married couples can each give up to $100,000 per year. 

The biggest mistake we see donors make is giving their charity a cash gift, when giving an appreciated stock might have lowered both their income taxes and their capital gains! Be careful, though – you’ll get a lump of coal if you give a stock that you haven’t held for enough time. 

Now is a great time to gift to your children and grandchildren. This may lower your estate and income taxes in future years and, depending on your state, you may even get a deduction if you give using a 529 College Savings Plan. You can give up to $16,000 per person per year without filing a gift-tax return.

Everyone feels the pinch this time of year. So, why not start saving for Christmas next year? Have your employer automatically deposit a small amount of each 2023 paycheck into a “Christmas” account. That way, you'll have that extra money ready to give to Tiny Tim! 

Christmas is a great time to focus on what matters most: family, friends, and community. If you run a small business, you give back in so many ways, including financial confidence for those who labor with you.

Re-evaluating your retirement plan type could benefit you, your workplace, and your community.

This tip is sure to bring more peace on earth or at least to your significant other! If you have a single-income household, consider a spousal IRA. For some families this is a great way to boost retirement savings and/or to find a nice tax deduction.

We hope that you have enjoyed our 12 Financial Tips of Christmas and hope you have a blessed New Year! 

Securities offered through Triad Advisors LLC, Member FINRA/SIPC. Market commentary or content is for informational purposes only. Please contact your financial advisor for advice about your specific situation. Past performance is not indicative of future results and investing involves risk and possible loss of principal capital.
Investment advisory services offered through NewEdge Advisors LLC, a registered investment advisor. Advisory services are only offered to clients or prospective clients where NewEdge Advisors, LLC doing business as Deupree James Wealth Management, LLC and its representatives are properly licensed or exempt from licensure and no advice may be rendered by NewEdge Advisors, LLC dba Deupree James Wealth Management, LLC unless a client service agreement is in place.