- Review any 401k contributions to reduce your taxable income and make any contributions up to the limits. Note that you can still make deductible contributions to an IRA by April 15, 2021 (the tax deadline) for the prior year. This includes all ROTH IRAs as well.
- Change the amount of your tax withholdings if necessary. If you usually get a large amount of money back when you file your taxes, you can change that with your Human Resources department so that you get more of your money throughout the year. If you like receiving a large tax refund check, then stay put.
- Review all your portfolios and change the asset allocations if necessary. Check your 401k accounts, IRAs, and personal portfolios. If one asset class has changed based on your original designation, then change it. Also, be sure that your overall asset allocation is aligned with your predicted retirement age and risk level.
- Review your annual budget. Now is a great time to cut out any unnecessary costs and also plan better for the upcoming year. You can also increase your savings contributions.
- Spend the remaining FSA money so that you don’t lose it. Typically, any money in an FSA account not used by December 31 of each year is lost. Note that the IRS changed its policies this year and added more items, such as thermometers, allergy medicines, tampons, and bandages. Check out the IRS website for a full list. https://www.irs.gov/publications/p502
- Give! Charitable cash donations was changed for 2020 in the CARES Act. This is only for the 2020 calendar year. You can contribute up to $300 cash donations to registered non-profit organizations and take a tax deduction.
As always, be sure to consult a tax advisor, accountant, attorney, or other professional regarding your personal financial situation.