Five Financial Tips to Consider Before 2019
Barry Bigelow with Great Waters Financial Stopped by FOX 21 Local News Wednesday Morning to Offer Five Easy Tips to Consider Before 2019
DULUTH, Minn. – The confetti will fly as we soon sing and ring in 2019!
But we can’t let the ball drop before setting ourselves up for financial success.
Local financial professional Barry Bigelow from Great Waters Financial stopped by FOX 21 Local News Wednesday morning to offer tips to consider before we jump into 2019.
Prep for Tax Season
• No one wants to think about taxes just yet, but there are a few things you need to keep in mind.
• The standard deduction is nearly doubling (from $12,700 for married couples filing jointly to $24,000.) That means many households will lose their incentive to itemize, and will take the standard deduction.
• There are few deductions that you can claim even if you aren’t itemizing. Contributions to your traditional IRA and HSA, as well as educational costs could be deducted.
• Before taking these deductions, be sure to read the rules carefully, as there are limits.
• To see if these deductions are for you, I have a link to the IRS Credit & Deduction page on my website, greatwatersfinancial.com
Consider a Conversion
• As the year winds down, you may want to consider converting from a Traditional IRA to a Roth IRA.
• Talk with your financial professional to see if this a good option for you. With the recent tax law changes, many people may find themselves in a lower tax bracket this year, making now through 2025 a good time to consider converting.
• Although you don’t get upfront tax breaks on a Roth IRA, your withdrawals are made tax-free as long as you are older than 59 1/2.
• A good thing to remember is that Roth IRAs are subject to what’s called the 5-year rule; you cannot withdraw your earnings tax-free until five years after the tax year you make your first contribution.
• No matter when you make a conversion in 2018, the clock gets set back to January 1st, 2018.
• So, if you make a conversion in November or December, it’s like getting a free year!
Check Your Withholding
• A recent survey found 70% of people haven’t checked their withholding in the last 6 months to know if they are paying the right amount in taxes.
• The Treasury and IRS made changes to the withholding tables this year. You will want to check your withholding before the end of the year.
• If you haven’t withheld the correct amount you may find yourself owing Uncle Sam in April or the government could be holding on to your money interest-free.
• Ideally, you want to have just enough withheld so that the amount will come as close as possible to your actual tax liability for the year.
• You can make adjustments by filling out a W-4 with your employer.
Max Out Your Future
• This year the 401(k) maximum contribution is $18,500 for those under 50 years old.
• There is a catch-up contribution available to those 50 years of age or older, allowing you to make a maximum contribution of $24,500.
• If you contribute to an IRA, you can max out your savings by contributing $5,500, or $6,500 if you are over 50 years old.
• You can also start planning for next year. The maximum contribution for 2019 will increase by $500 for 401(k)s and IRAs.
Clean Up Accounts
• Finally, it’s time to tidy up the books!
• Simplify your accounts by setting up automatic payments to avoid late fees. You can also set up automatic transfers that put money right from your paycheck into your savings accounts and retirement plans.
• Check your credit report for mistakes. If there are errors like late payments, charge-offs or collections, or if your credit limits are reported as lower than they really are, it is usually worth the effort to correct it with the bureaus.
• Finally, make sure your life insurance and beneficiaries are up to date.
• You may need to make updates if there were any major life changes, like births, deaths, marriages or divorces this year.
Click here to learn more about Great Waters Financial.