Management Finance

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5 Personal Finance Spring Cleaning Items

  1. Review tax return BEFORE filing. This allows you to maximize prior year IRA contributions.  Even if only making non-deductible IRA contributions to be converted to a Roth, the contribution must be made before filing your tax return.
  2. After filing, adjust for the coming year. This may include adjusting your withholding going forward to reduce the size of a refund or the amount of tax owed.  If there are no material changes to your income in 2019 and cash flow allows, make IRA contributions for 2019.  The sooner money is invested, the longer it has to work for you.
  3. Review your deductions (schedule A). An important change in tax law reduced the number of filers itemizing their deductions. Discuss with your tax advisor ways to maximize deductions going forward.  This may include a change in strategy when making charitable contributions.
  4. Review beneficiaries on all accounts/insurance policies. This is very often overlooked but should be reviewed at least every few years.  Many people do not update beneficiaries after getting married/divorced, having children, having children grow up, or creating an estate plan.  Beneficiary change forms are quick to complete, and the implications of incorrect beneficiaries can be devastating to heirs.
  5. Review your estate plan or have one completed immediately! Due to ever changing tax and estate laws, plans should be reviewed at least annually.  Add in changes to personal situations (new family members, increase/decrease in asset levels, additional property purchases) and new technology (after death, who might have access to your computer, social media account, airline miles/reward points).  Plans are becoming outdated quicker than ever.