When a new year is around the corner, it’s important to make any necessary adjustments you need to reach your financial goals. Here is a look at what to include in your fall finance checkup when preparing for the year ahead.
With fall’s signature foliage in full-effect, you know it’s time to gear up for holiday shopping, end-of-year deadlines and annual financial checkups. The change of the seasons is always a good time to take note of where you are and what you’re doing financially.
Here are a few key things to consider to help ensure you’re in the best financial position for 2022.
During fall, we need to make some important decisions for the year to come. One of those decisions involves open enrollment. This is the time to make changes to benefits, such as health savings contributions, medical coverage, and others. Think long and hard about this before locking in your elections.
During the holidays, people feel the call to give back through charity. When making your gifting plans, you will need to decide whether you want to give cash, or through the gift of your volunteer time.
Another option for giving back is a donor-advised fund, which provides potential tax advantages while helping you support your favorite causes. If you’re more serious about creating a more substantial structure and commitment, you might want to consider a family foundation in which you engage your family members in philanthropy as well.
The Internal Revenue Service reminded taxpayers that a special tax provision will allow more Americans to easily deduct up to $600 in donations to qualifying charities on their 2021 federal income tax return. Under this provision, individual tax filers, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2021. The maximum deduction is increased to $600 for married individuals filing joint returns. Included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, a more limited version of this temporary tax benefit originally only applied to tax-year 2020. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted last December, generally extended it through the end of 2021.
Make sure you’re donating to a recognized charity. To receive a deduction, taxpayers must donate to a qualified charity. To check the status of a charity, they can use the IRS Tax Exempt Organization Search tool.
Despite annual income tax returns are due to the IRS on Friday, April 15, 2022, you want to get started with your tax planning early. The pandemic may still impact your tax liability for this year in ways that you haven’t considered.
First off, Advance Child Tax Credit payments may be smaller than you expect next year. This is due to the fact many Americans have been receiving the additional funds over time, so the offset that the credit offers won’t be as substantial as you think. Secondly, if your mortgage has been in forbearance you will also lose the deduction you enjoy for mortgage interest paid.
While the state of the pandemic remains in flux, the IRS has so far given no indication that it will postpone the tax-filing deadline for the third year in a row. In addition, given the rules changes going into effect in 2022 — as well as potentially complicating factors, like this year’s expanded child tax credit payments and repayment of deferred Social Security taxes, taxpayers have even more incentive to get a head start on their 2021 returns.
The stock market volatility caused by the pandemic resulted in many Americans’ retirement savings took a hit. What’s more, the CARES Act expanded savers’ ability to access their retirement funds penalty-free. With all these changes in place, you may have taken funds out of retirement savings last year to get through the challenges that COVID created. If so, you want to set a plan to pay those funds back into your retirement accounts as soon as possible.
To capitalize on growth, make sure you up your contributions to catch up on any lost retirement funds. Even if you didn’t withdraw any of your retirement funds, check in on your balances to see if you’re on track. If you haven’t used your complimentary consultation with us yet this year, schedule an appointment to meet with us before the end of the year. That way, we can discuss a strategy for allocating your funds the right way for 2022.
Personal Finance Spending
While you’re at it, you may want to review your habitual spending from 2021 and make adjustments for 2022. When was the last time you looked at your home, renters, and/or auto insurance policies? Ask your provider if there are discounts that may be applied or compare providers and make the switch.
For added savings, budgeting (and sticking to that budget) is a sure way to minimize overspending during the most expensive season of the year. Your budget keeps you financially accountable so you can prioritize the things that are most important to you. Revise or establish your budget by reviewing your 2021 spending and create a budget for 2022 and beyond. The financial advisors at CKS Summit Group can help you build a budget as part of a broader financial plan.
Remember all those great financial resolutions that you had at the beginning of the year? Now is the time to check in on them.
Take a few minutes to check your financial progress and consider whether your plans need tweaking. Have your priorities changed? Do your current financial strategies still fit your needs?
Another important question to answer: have you built an adequate emergency fund? We recommend you save enough cash to cover six months’ worth of basic expenses as a general guideline. To get started, first figure out how much to save by using our free online Financial Calculators.
While many people focus on holiday celebrations and new year’s resolutions this time of year, as 2022 rapidly approaches, it’s a critical time to assess your current financial situation and review your overall financial goals. This includes both preparing for the new year, AND taking stock of the year past!
Whether you’re looking to reevaluate your annual financial plan, or even explore a brand new personalized Retirement Income Plan, CKS Summit Group is here to help. Contact us here today to set up your complimentary strategy session.