It's October - What Should You Be Doing?

October is a good time to take stock of where your tax and financial life is, and to make adjustments if necessary. Here follows some advice on what you should be thinking about. It's not an all inclusive list, just what's on my mind after some conversations with clients. Don't let the business one near the top fool you, there's stuff in here for personal taxes too:

1. Get a flu shot around Halloween. Make this your Happy Halloween Habit. I know it's not tax advice, but do it anyway. You won't get the flu from it.

2. If you own a business, take stock. Run some rough numbers on income and tax deductions to see if you might be owing more or less money than you thought. This doesn't have to be perfect, a gross comparison of this year to last year can give you an idea where you are. If you are making a lot more money, set some aside for the tax bill, or look at PLANNED expenses for 2020 that might be able to be moved up to 2019. DO NOT just spend money to save on taxes - that's dumb. If you planned your estimated payments right, you should just be able to save the money in your bank or business account, rather than send it to the government. If income looks a little low, get hot and make more! The goal is for tax time to suck - that means you're winning! That said, if income is way down, and you're having trouble meeting expenses, you could talk to your tax dude about lowering your estimate for January and putting more money in your pocket.

3. Take a look at your investments (outside of IRA's and 401k's). See what your unrealized gains and losses are. You might be able to harvest some losses to offset capital gains, or a small amount of other income. If you already have losses, you might be able to offload some winners near their peak and minimize the tax hit. If your income is low enough (basically you are in the 12% tax bracket) you might be able to sell some winners, and then buy them right back, and avoid paying taxes on the gains - EVER. Talk to a pro before you do this, or make sure you FULLY understand how this works.

4. Work on maximizing your 401k and IRA contributions. If you got a raise this year, and your retirement accounts didn't, you're messing up. Make a plan to get these as close to the maximum as you can afford. Include your Health Savings Account in this calculus too. If you expect a big refund, lower your withholding and put the extra paycheck money into these accounts. Plan on using your refund to top the accounts off if you get one. You have until April 15th to do this. Just write the refund out of your spending plans!

5. Gather your latest pay stubs for you and your spouse and pop over to irs.gov and run the numbers through their withholding calculator to make sure you are where you need to be. This tool is AWESOME if you feed it good information.

6. Check where you are with regard to itemizing. Add up your Real Estate Taxes, State and Local Income Taxes and Car Taxes (max of $10,000). Add in your mortgage interest (try to estimate the full year value). Now add any contributions to charity you have made or are sure you will make. Compare that total to your standard deduction (roughly $12,000 Single, $18,000 Head of Household and $24,000 MFJ - I plan on recycling this post every year, so these rough numbers will work for a while for this very rough thing we're doing). If you are close, or slightly over, consider clearing some junk from the house and donating it to a Goodwill type charity. Make sure to value the items at what they would sell for in a reasonable transaction, not what Goodwill would sell them for. If you are well below, but might be able to close the gap with a great charity year, consider making a plan to do all your charity donations every few years, rather than spreading them out. Pick one year and go nuts with Goodwill, clearing the house out of all the junk, and taking a BIG itemized deduction number.

7. Remind yourself what tax paperwork you need to be looking for (or might need to get - like daycare statements) and make a checklist. Put it near where the mail comes onto your desk or table and check things off as they come in. Make sure to look for a 1098 form from every mortgage company who held your mortgage if it was sold or you refinanced.