Last minute financial things to take care of this year : Rooftop Views

Rooftop Views

Last minute financial things to take care of this year

It's easy to focus all of your "financial attention" on holiday spending, but some important financial loose ends must be tied up before the year's end. TheNest.com, hip home and lifestyle resource, taps its Money Expert (TheNest.com/money) Robert Pagliarini to help narrow down the essential money must-dos to tackle before January 1. Why not kick off 2008 with a fresh start?

1. Max out Your 401(k)-It's imperative to check in regarding your 401(k) plan before the end of the year, and ask if you can make a one-time contribution or increase your per-check deduction if you haven't yet reached the contribution limit. If you're in a situation where you can afford to contribute the maximum amount of $15,500, this will give you the greatest tax benefit. But really, any contribution is beneficial because it will reduce the amount of income you are taxed on for 2007. Have extra vacation days left over? See if your employer offers the option to contribute the value of those extra days towards your 401(k)!

2. Take Advantage of Your Health Insurance-If you're enrolled in a health insurance program that has an annual deductible, now's the time to take advantage of it. Squeeze in those last-minute doctor appointments or fill those prescriptions that you've been putting off. Remember, after the first of the year, you start from scratch with a new deductible to meet long before your insurance will help with those medical bills.

3. Charitable Contributions-If you itemize, make charitable contributions before the end of the year to maximize your deductions. Cash is great, but a savvier way is to take advantage of those stocks or mutual funds that you've owned for more than a year by gifting the shares. This not only helps the charity, it helps you too! Instead of selling these appreciated shares and paying tax on the gain, you can just transfer the shares to the charity without any taxable gain to you (nonprofit charities don't pay taxes, so they can sell your shares and avoid capital gains tax as well).

4. Underperforming Stocks: Sell or Hold-If you bought shares of stocks or mutual funds that are now at a loss, this is the time to sell them. By selling them now, you'll be able to deduct up to $3,000 from the amount of salary that you'll be taxed on, or you can offset any gains from sales of stock or mutual funds you've taken this year. Why bring leftover baggage into the New Year? Get rid of it now before it's too late.

5. Use Your Flex Spending Before You Lose it-If you take part in a flexible spending program for medical or childcare costs through your employer, it's important to check in and see how much money you still have left in your account. Most plans are "use it or lose it," meaning that if you don't use the remainder of money left in your account by the end of the year, it's gone! Find out what expenses are allowed under the plan and use up your balance by December 31.

6. Paper Cleanup 2007-Before you start sorting and pitching all of your 2007 paperwork, you need to decide whether you'll be taking the standard deduction or if you'll be itemizing. Here's a tip: If your eligible itemized deductions exceed your standard deduction, it's to your benefit to itemize. Don't start pitching receipts and other important papers until you know exactly what you need to keep and what's okay to throw out. Once you know what you need, make an organized folder for all of these important documents so you're ready to go when April 15 rolls around.