Happy holidays everyone! December is typically a time of gathering, relaxation, and gifting. Aside from the festivities that we participate in this time of year, it is also important to remember that health is the best possible wealth we can possess. Those of us working in the hospitals have seen the tragedies that can roll into the emergency room, and we are all grateful for those healthcare workers who are on duty when most of the world is at home with their families.
In keeping with financial angle of this website, here are a few housekeeping items to make note of before we ring in a new year:
Keep receipts of your donations
The amount of bookkeeping needed for non-cash donations like clothing and furniture depends on how much you are giving away. In general, you should ask for receipts on everything you donate in order to show that the receiving party qualifies as a non-profit or equivalent entity. Amounts greater than $500 require more substantial proof of donation, like detailed photos, where the items are from, and estimated worth. Non-cash donations totaling $5000 or more will likely require official appraisal values.
Cash or cash-equivalent donations can be deducted in full on your tax return, provided that the amount doesn’t exceed a certain percentage of your gross income.
It’s better to keep good bookkeeping up front—as we all know our memory fades with time!
Get ready to fund your Roth IRA in the new year
Most doctors should be able to front load their Roth IRAs in January. Remember that the longer that you are invested in the market, the more likely (historically) you will come out ahead.
Fund your 529 account
If you intend to fund a child’s 529 account, do it before the end of the year if you want to have a tax deduction. If your state doesn’t offer a tax deduction or if you’re using another state’s 529 custodian, then contributions based on tax year will not matter.
Self-employed can finalize 401k contributions
Most self-employed physicians simply contribute up to the maximum 401k limits, but many doctors have full-time employment jobs along with contract or locums work. Income earned from these ancillary income sources may not necessarily allow for maximum contributions up to the IRS limits.
That’s it! We hope that all of our readers have a safe and joyous holiday season!
What other financial housekeeping tasks do you complete before the year’s end?
Photo courtesy of Flickr.