12 simple ways to improve next year’s finances now - Newschannel 6 Now | Wichita Falls, TX

12 simple ways to improve next year’s finances now

© George Doyle / Stockbyte / Thinkstock © George Doyle / Stockbyte / Thinkstock

By Andrew Housser

The holiday season encourages us to make merry with friends and family. As the year draws to a close, however, it also is important to maintain focus on finances and your long-term future. This year-end checklist can help you successfully complete 2016 financial tasks and prepare for the coming year.

1. Estimate your tax obligations. Federal income tax returns are due in April, but a trial run on your return now can help predict your tax situation. Use a simple online tax calculator to estimate whether you will get a refund or owe money. Adjust your information to see how any year-end contributions and credits might affect your tax picture.

2. Spend your remaining FSA funds. Flexible spending account (FSA) plans reduce tax bills by letting taxpayers use pre-tax dollars for medical care and/or dependent care. Most plans end Dec. 31. If you have not spent the funds in your account, you may lose any remaining amount over $500 at the end of the plan year. Check your balance and submit FSA-qualifying expenses. Check IRS guidelines for a complete list of expenses that qualify.

3. Bundle medical costs. Medical and dental expenses that total more than 10 percent of adjusted gross income (AGI) might be tax-deductible. (For people aged 65 or older, 2016 medical expenses that exceed 7.5 percent of AGI are deductible.) If your expenses are close to that amount, consider scheduling other needed care or medical purchases before the end of the year. Reaching the medical expense deduction threshold will save on taxes. Similarly, if you know you will need a costly procedure next year – from elective surgery to braces – think about delaying care until January. Grouping medical costs in one tax year makes you more likely to benefit from the deduction.

4. Maximize HSA contributions. Health savings accounts (HSAs) let you save money for medical care in a tax- benefited account. You can deposit money in an HSA account tax-free and withdraw the funds tax-free to pay for medical costs. The funds never expire – you can keep them until needed. HSA contribution limits for 2016 are $3,350 for individuals or $6,750 for a family. People aged 55 and older can save $1,000 more.

5. Pay down debt. Year-end financial advice often urges people to invest in retirement savings or give to charity to benefit from tax deductions. However, if you carry credit card debt, personal loans or other debt, carefully consider paying those balances first. Consider dedicating any end-of- year bonus to paying off debt or building an emergency fund.

6. Organize finances. While you are sorting paperwork, create a financial organization system. Pay each bill right after you open it and set up electronic reminders for future payments. Set up monthly bills, such as phone, utility or rent, for automatic payments.

7. Update (or create) your budget. A budget allows you to compare actual spending to what you planned to spend. If anything is out of line, you may have time to correct it before year-end, or set a new direction for 2017. Think about your long-term goals, and as applicable, talk to your partner or family about working toward those goals.

8. Review insurance policies and beneficiaries. Have you checked rates on your insurance coverages recently? If not, request quotes from a few companies to find out if you can reduce your premium or improve your policy. Make sure your insurance beneficiaries are up to date.

9. Evaluate your services and subscriptions. Review expenses for any monthly subscription services, such as Internet, cable and streaming entertainment, a gym membership, mobile phone service, security system, music or audiobooks, and even grocery and clothing delivery. Cancel any services that you no longer use or underuse. For services such as Internet and phone, call providers and ask if the company can reduce your rate in exchange for your continued loyalty.

10. Check your credit report. Everyone should review his or her credit reports each year. You can obtain yours for free once per year at www.annualcreditreport.com. If you find errors, follow the credit reporting company’s instructions for reporting the errors and asking for corrections.

11. Give to charity. You can deduct the value of charitable donations if you contribute before midnight on Dec. 31, and if you itemize deductions on your taxes.

12. Arrange for debt help or financial advice. Now is a good time to make an appointment with your accountant, financial advisor or tax preparer. Similarly, if you are struggling with debt and unable to make minimum payments, begin looking into debt help options.

Completing these financial tasks will help you to start 2017 on solid footing. After all, there is no better gift for yourself and your loved ones than financial preparedness.

Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.
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