The holidays are here, and it’s officially the season for giving. All too soon, however, it’ll be tax season. Here are a few financial tips to help you tackle your tax return after you ring in the new year.
1. Make a Charitable Donation
What better time than now to donate to a favorite charity? Not only will you help others, but you’ll award yourself a tax write-off as well. You can take the traditional route of giving cash, but consider donating some of your securities that have appreciated in value. That way, you can get a deduction for the full value and avoid paying a capital gains tax. You can feel good about helping others with a little caregiving outside of the family.
2. Clean House: Sell Off Underperforming Investments
Now is also a great time to rid yourself of any investments that aren’t working out. If you sell now, you can claim the loss on your tax return — up to $3,000 for this year — and carry over any remaining losses to future tax years. Just be sure you don’t buy the same security within the next 31 days or you’ll lose that tax deduction.
3. Max Out Your 401(k)
Take advantage of this great investment opportunity by contributing as much as possible, up to the $23,000 maximum annually. This will lower your taxes now, and although you will have to pay taxes on the funds eventually, you’ll likely be in a much lower tax bracket during retirement. Plus, you’ll have the peace of mind of knowing you have funds for retirement regardless of what happens with Social Security and Medicare.
4. Be Aware of the AMT
This one can be a bit tricky. The alternative minimum tax, or AMT, used to be targeted to wealthier tax payers, but if you aren’t careful, you may find yourself caught up in this tax. This is where you want to consult a professional tax accountant or run an estimated return on a tax program to be sure you won’t be hit with the AMT. In the event that you are subject to the AMT, find out what strategies you can put in place before the end of the year to minimize the impact.
So take advantage of these financial tips for caregivers: With a little financial planning during the busy holiday season, you can be prepared when tax time rolls around. If you’re ambitious, you could even get your taxes filed early after the new year festivities — or as soon as paperwork starts coming in!
With so many responsibilities, caregivers face many stresses — whether it’s thinking about finances or the safety of their senior loved one. Just as financial planning can bring peace of mind, so can investing in a medical alert system, which provides caregivers and seniors with 24/7 support.