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  • Writer's pictureMark Fonville, CFP®

Your Ultimate End of the Year Financial Checklist

Updated: Jan 7

Countdown to Prosperity: Your Ultimate End of the Year Financial Checklist

As we bid farewell to another year and gear up for the next, it's time to get our finances in shipshape.

Whether you're a savvy saver, a budgeting beginner, or somewhere in between, this end-of-year financial checklist is your golden ticket to a prosperous new year.

Think of the closing weeks of the year as the perfect opportunity to reflect, reassess, and revitalize your financial strategy. From tweaking your budget to maximizing your investments, we've got a list that covers it all.

So grab a cup of your favorite winter beverage, cozy up, and let's dive into the smart moves you can make today to ensure a brighter financial tomorrow. Let the countdown begin!

1. Understanding Capital Losses in Investments

First off, let's talk about capital losses. These are when parts of your investments (like stocks or mutual funds) are worth less now than at the beginning of the year.

It's not all bad news, though. You can sell these investments at a loss, and use that loss to lower your taxable income. This means you can offset up to $3,000 of regular income (like from stock dividends or bond interest) and even more if you have capital gains (like from selling a house or business).

It's like turning a financial oopsie into a tax-saving win!

2. Roth Conversion and Its Tax Advantages

Next up is the Roth conversion. This is when you move money from a regular Individual Retirement Account (IRA) to a Roth IRA. You pay taxes on the money now, but then you don’t have to pay taxes on it when you withdraw it during retirement. If you've got some losses in your investments, converting to a Roth IRA might be cheaper tax-wise right now.

3. Maximizing Your 401(k) Contributions

If you're working and have a 401(k) plan, make sure you're putting in as much as you can. For 2023, you can contribute up to $22,500 yourself (plus another $7,500 if you are aged 50+), and the total limit (including what your employer contributes) is $66,000. IRAs aren't as urgent; you have until April 15 next year to contribute for 2023.

4. Charitable Donations and Tax Deductions

If you like giving to charity, think about making donations before the year's end to get a tax deduction. But here's the catch: your donations need to be more than the standard deduction ($13,850 for singles and $27,700 for joint filers) to really benefit. Some people "bunch" multiple years of donations into one big donation to surpass this threshold.

5. Donating High-Gain Investments

Here’s a cool idea: instead of selling investments that have gained a lot (and paying a lot of tax), why not donate them? You get a tax deduction based on the current value, and you skip the capital gains tax. It’s like giving to charity and getting a financial high-five in return.

6. Handling Underpaid Estimated Taxes

Lastly, if you find out you haven’t paid enough in taxes for the year and you're taking money out of your IRA, you can have the tax you owe taken out of your IRA distributions.

The neat part? Even if these payments are late, the IRS will treat them as if they were on time if it covers what you owe.

7. Check and Freeze Your Credit Report

Checking your credit report regularly is an essential aspect of maintaining your financial health. It's like having a periodic health check-up, but for your finances. Your credit report is a detailed record of your credit history, including loans, credit cards, and payment behavior.

In addition to checking your credit report, locking (or freezing) it is a proactive step to safeguard your financial identity. When your credit report is locked, creditors can't access it without your permission.

This is particularly beneficial in preventing identity thieves from opening new accounts in your name. If a fraudster attempts to use your personal information to apply for credit, the lender will be unable to pull your credit report due to the freeze, thus stopping the fraud in its tracks.

Here's how to access the three main credit bureaus credit report locking feature:

While it's a powerful tool for protection, remember that you'll need to unlock it temporarily if you plan to apply for new credit. Regularly checking and managing your credit report, along with locking it, are key practices in today's world where identity theft and financial fraud are increasingly common.

Conclusion: End Of Year Financial Checklist

As the final days of the year swiftly approach, it's time to wrap up our financial to-do list.

This journey through our end-of-year financial checklist, from harnessing capital losses to smart tax moves and safeguarding our credit, is more than just a yearly routine. It's a powerful strategy to fortify our financial future and enter the new year with confidence and control.

Remember, each step on this checklist is a stepping stone towards a more secure and prosperous future.

So, as you download our more comprehensive free year-end checklist and sip on your winter beverage, think of this not just as a seasonal task, but as a celebration of your financial savvy and a commitment to continuous improvement.

Whether you're navigating the complexities of Roth conversions or making impactful charitable donations, know that these actions set the stage for a financially healthier and more aware you. Here's to closing this year on a high note and welcoming a new year filled with opportunities and growth.

Cheers to your financial well-being and a bright new year ahead!

Mark Fonville, Financial advisor in Richmond VA

Mark Fonville, CFP®

Mark is a fiduciary, fee-only financial advisor at Covenant Wealth Advisors specializing in helping individuals aged 50 plus plan, invest, and enjoy retirement without the stress of money.

Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine.


Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Registration of an investment advisor does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.

Registration of an investment advisor does not imply a certain level of skill or training.


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