7 Smart Year-End Financial Moves

by  Robert F. Bodio, Jr., GW & WADE PRINCIPAL

No matter where you’re at in life, it’s important to revisit your financial situation before the end of the year. In fact, there are some financial moves that need to occur by December 31 or you run the risk of losing savings and missing tax deductions. Also, there are a handful of legal considerations that we encourage you to ponder.

Our goal is to help you end this year in the strongest financial position and ensure that your family or business are well protected heading into 2018. Here are 7 smart year-end financial moves:

#1 – Spend Dependent Care Savings

Keep in mind that dependent care flexible spending account (FSA) balances do not roll over into the next year. Some employers allow a $500 carryover, but this option is unique to each employer and is not mandated. Be sure to use your FSA balance before you lose it.

What’s more, if you’re in the midst of open enrollment for your employee benefits, you’ll generally get a bigger tax break on your income tax return with a dependent care FSA versus the child care credit, particularly as your income rises.

Kiplinger provides an excellent comparison of the two options[1].

#2 – Make (or Defer) Large Purchases

If you’re a business owner, it may make sense for you to make a large purchase in 2017, increasing your business write-offs this year. However, the opposite can also be true.

The financial empowerment portal, The Balance, gives an excellent example of why you may want to defer a large purchase until 2018, “If you had a pretty bad year with a lower than average profit and expect your profit to pick back up in the following year, you may want to defer as many expenses into the following year as possible. If you are in the 20% tax bracket this year, but will be in the 30% tax bracket next year and you have $10,000 worth of expenses in question, deducting them this year will save you $2,000, while deducting them next year will save you $3,000. Read the full article here[2].


#3 – Reconfirm Availability & Capability of Guardians & Executors (Personal Representatives)

Now is an important time to reflect on what has changed in your life and update related legal and financial documents accordingly.

To ensure that your documents are up to date, ask yourself these five key questions:

  1. Is the executor, now referred to as the personal representative, of your will still available and capable?
  2. Are the guardians assigned to raise your children in the event of your death still emotionally and physically capable?
  3. Is the trustee assigned to manage the money for your children still capable?
  4. Has your health changed, potentially escalating the need to update your living will with new end-of-life medical care requests or revisiting your business succession plan?
  5. Are your beneficiaries current? For example, is your ex-spouse still listed as a beneficiary, or has another relationship soured in some way?

Overall, year-end holidays often create additional opportunities to speak with family members, making it an excellent time to update them regarding your latest estate and legacy goals.

[RELATED GUIDE] Year-End Financial Planning Strategies: 5 Strategies to Help Avoid Financial Landmines. Download the informational guide now.

#4 – Add Needed Insurance Riders

Did you add a swimming pool or a trampoline to your property this year? Or, perhaps you’re running a small business out of your home. If so, you may want to consider purchasing an insurance rider to give yourself some extra protection in case of an injury or other mishap.

Keep in mind that any highly unique or expensive item in your home will generally not be covered by your homeowners insurance, such as fine art or jewelry.

Also, the end of the year is an excellent time to revisit your auto insurance policy. It never hurts to have this requoted by another insurance company or possibly drop coverage levels since your vehicle is another year older.

#5 – Offset Capital Gains

To help minimize your 2017 taxable income, consider selling stocks, bonds and other funds that have lost value this year.

Investopedia gives a simple example[3]“Imagine that on the first day of any given year, you invest $100,000 in the U.S. stock market via an exchange-traded fund (ETF)…Let's assume this ETF trades off by 10%, falling to a market value of $90,000. Rather than feeling sorry for yourself, you can sell the ETF and reinvest the $90,000 back into the stock market. Although you are keeping your market exposure constant, for IRS tax purposes, you just realized a loss of $10,000. You can use this loss to offset taxable income, leading to incremental tax savings or a bigger refund.”

#6 – Make Last-Minute Home Improvements

If you’re considering selling your home in the next few years, it may make sense to do a last-minute home improvement project in 2017. Capital improvements work to increase the tax basis in your home thereby reducing the gain upon future sale.

Exactly what does the IRS consider a capital improvement?

According to HouseLogic[4], “A capital improvement increases your home’s value, while a non-eligible repair just returns something to its original condition. According to the IRS, capital improvements have to last for more than one year and add value to your home, prolong its life, or adapt it to new uses.”

The educational portal offers five examples of capital improvements:

  1. New bathroom
  2. New addition
  3. Basement finishing
  4. New furnace
  5. Master suite addition

#7 – Double Check W-4 Tax Withholdings

Many things can happen in the course of any one year, including marriage, divorce, adoption and more. If you’ve had any significant changes in your life these past several months, then be sure to double check your tax withholdings. Keep in mind that if you have too much tax taken out and end up with a tax rebate, that’s akin to giving the government an interest-free loan. Of course, you don’t want to withhold too little, escalating unwanted surprises come April 2018. Therefore, take a quick look at your tax withholdings now to make sure you’re accounting for any recent changes in your life.

[RELATED GUIDE] Strengthen Finances & Reduce 2017 Taxes
Use These 5 Strategies to Help Avoid Financial Landmines. Get the informational guide now.

If you have questions about your financial situation, please contact us at any time. Perhaps you’ve recently experienced a major life event, or retirement is on the horizon? No matter what your circumstances, we welcome the opportunity to provide you sound financial advice and help you achieve your lifetime goals.

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The information provided above is general in nature and is not intended to represent specific investment or professional advice.  No client or prospective client should assume that the above information serves as the receipt of, or a substitute for, personalized individual advice from GW & Wade, LLC, which can only be provided through a formal advisory relationship.  

Clients of the firm who have specific questions should contact their GW & Wade Counselor. All other inquiries, including a potential advisory relationship with GW & Wade, should be directed to:

Laurie W. Gerber

GW & Wade, LLC




[1] https://www.kiplinger.com/article/spending/T027-C001-S003-tax-breaks-child-care-flexible-spending-accounts.html

[2] https://www.thebalance.com/avoiding-mistakes-with-your-small-business-s-tax-planning-1200718

[2] http://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp

[4] https://www.houselogic.com/finances-taxes/taxes/tax-breaks-capital-improvements-your-home/


Robert F. Bodio, Jr.



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