5 Last-Minute Money Moves For 2015

By Barbara Friedberg

With 2016 just around the corner, now is the time to get your finances in order, whether by cleaning things out or laying the groundwork for next year. Prioritize these five last-minute money moves to make your transition into 2016 easier and richer.

The flexible spending account is a wonderful tax saver. Every year, you estimate how much money you expect to spend on health care or child care expenses. This amount, up to the $2,500 maximum, is then transferred into an FSA pre-tax and reduces your taxable income. Eligible expenses include out-of-pocket costs such as prescription drugs, doctor co-pays, and vision and dental costs. The savings come because you pay for these qualified expenses with the pre-tax monies.

The downside of the FSA is that if you don’t use the money by the end of the year, you lose most of it. Fortunately, there are new rules that allow you to use most of the FSA contributions, according to the Society of Human Resource Management.

This is one of my favorites. Giving to charity helps others and benefits you. Giving to charity includes making cash contributions to eligible organizations as well as donating gently used clothing and household items to charitable entities such as Goodwill and the Salvation Army.

If you itemize your taxes, you can claim both cash and non-cash contributions on Schedule A of the 1040 tax form. Claiming a charitable deduction is fully explained in the publications 526 and 561. Simply stated, you keep track of cash and non-cash charitable deductions, input the information on your Schedule A, and this amount is deducted from your taxable income, reducing the tax you pay.

I make it a habit to donate my old stuff to charity during the year. Every month or so, I go through the cabinets and closets and fill up a bag to donate. Be sure to hang on to the receipts to add up the deduction on your tax form.

The more money you can contribute to tax-advantaged accounts, the lower your tax bill and the more money you’ll sock away for retirement. If you contribute to a traditional individual retirement account, you might qualify for a tax deduction if your workplace doesn’t offer a 401(k). If you are covered by a retirement plan at work and your income is above a certain level, however, then you might not be able to contribute the full amount to an IRA.

The website gives the latest updates about IRA contribution and deduction limits. For 2015 returns, singles earning more than $71,000 lose the tax break if they’re covered at work. Married couples can earn up to $191,000 and still take the IRA tax deduction as long as only one spouse is covered by a workplace plan. The tax break is eliminated for married couples making more than $116,000 if they are covered by a workplace plan.

Jim Wang, personal finance expert and publisher of Wallet Hacks, recommended decluttering your wallet or purse.

“Remove old receipts, old cards and other junk you’ve accumulated,” he said. “Clutter can have a negative impact on your brain, and your wallet or purse is a small enough place to clean out quickly.”

“While you’re at it, see if you can limit the number of credit cards you carry to just one or two,” he added. “Try to limit yourself to only carrying the essentials and then adding other items back as you notice them missing. I did this several years ago and have never looked back.”

Simplifying your purse, wallet, accounts and credit cards can make your life more manageable. You’ll feel less weighed down physically as well as less tempted to use credit.

Similar to increasing IRA contributions, the same strategy also works for your workplace retirement account. If you can contribute a few more dollars into a 401(k) or 403(b), you’ll save on taxes this year and add to your retirement nest egg.
Even if you can’t hit the maximum allowable contribution of $18,000 for 2015, or $24,000 for those over age 50, bumping up your annual amount will save you a few extra dollars by reducing the taxes you’ll owe in April. Although these extra contributions might seem impossible, you’ll be surprised at how your spending will adjust when there’s less money available.
Barbara Friedberg writes for

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