It’s the most wonderful time of year…to tidy up your finances! Here’s a quick checklist of 5 money moves to check off before the year is up.
1. Check the balance on your health care FSA
A health care flexible spending account, or FSA, is a smart way to save on medical expenses throughout the year because the money you set aside in that account is pretax (so less taxable income). You can set aside up to $2,600 in an FSA each year and pay for eligible medical expenses that are not covered by your health plan like co-pays, deductibles, dental work, medications, glasses, contacts, crutches, and basically anything you can find at a drugstore.
Not to be confused with a health spending account or HSA, which has no end-of-year deadline, the money in your FSA must be used by the Dec. 31, unless your employer allows for $500 to roll over into the next calendar year, or a 2-month grace period to use up the funds. So if this is something you set up, check your balance and submit your receipts. Because if you don’t use it, you can lose it.
2. Submit all your receipts for your dependent care FSA
The same goes for your dependent care flexible spending account, or DCFSA: you get a tax benefit on the expenses that go toward childcare or even eldercare. For families paying an arm and a leg for childcare, any bit of savings helps. In my own DCFSA, we set aside the maximum of $5,000 we’re allowed per household and it saves us 30%, or $1,500 a year.
But again, you have to get in those claims and receipts. An easy way to do this, if your company uses WageWorks for these benefits, is to download the mobile app and file your claims and check your balances on the go.
3. Boost your college 529 savings
For parents who’ve set up a 529 plan to save for their child’s college education, know that anyone can give up to $14,000 a year, per beneficiary, before you get hit with a gift tax. For example, let’s say your daughter is the beneficiary of the 529 you set up. You, your husband, and your in-laws can each give her $14,000 a year.
But there are limits to the total a beneficiary can have in his/her account, and it varies by plan, so the custodian of the account needs to keep track of that.
4. Don’t forget to donate
Studies show the more you give, the happier you are. An added perk is that you’ll also save on taxes, if you itemize deductions on your tax return. But remember the donations are only deductible for the year you made them. And you must keep an account of your giving with bank records, paystubs, or written communication from the organization with the date and amount of your contribution.
5. Double your donation through workplace giving programs
Workplace giving can also increase your donation because many companies will match what you give, some even dollar for dollar – doubling your gift instantly. But each year, up to $10 billion in matching gifts goes unclaimed, so don’t let that happen again this year and check with your employer.
If you don’t have the funds now but want to give, you can charge a donation to your credit card within this calendar year and pay it off next year. As long as the charge hits your account within 2017, you’re still able to itemize that deduction on your return.
Last but not least, if you’re strapped for cash, you can also give non-cash donations. Take the holiday break to declutter your life, do some good, and pump up your tax deductions. Your non-cash goods are valued at the fair market price. For non-cash contributions worth over $500, you’ll need documentation more substantial than a receipt, as well as form 8283 attached to your tax return.
What are some ways you’re tidying up your finances at the end of the year? Share them with me on Twitter @Jeanie531 or in the comments below.
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