It is that time of year again, time to straighten out your finances. Here are five money tips that you should consider before the end of the year.
Health Care Flexible Spending Accounts-Check Your Balance
Also known as FSAs, these health care savings accounts are a smart way to save money on your medical expenses since the money you put into the account is from pretax dollars, which means you will have less taxable income. Each year, you can put up to $2,600 in an FSA and use that money to pay for medical expenses that your health plan does not cover. Some of the medical expenses include deductibles, medications, co-pays, dental work or anything that you would find at your local pharmacy.
Do not confuse an FSA with a health spending account, which has no deadline requiring you to use the money before the end of the year. An FSA requires you to use the money you set aside by Dec. 31, unless your employer gives you the option to roll up to $500 into next year's account. Therefore, it is wise to check your balance before the year is up and submit all your receipts. If you do not use the money in your account, you could lose it all.
Submit All Your Dependent Care FSA Receipts
If you have a dependent care flexible spending account, also known as a DCFSA, you will qualify for a tax break for any childcare expenses or eldercare expenses. If it is costing you a fortune in care for your child or children, any savings on your taxes can help. Some families set aside the $5,000 allowed per household and can save roughly 30 percent per year, or nearly $1,500.
To qualify for any tax benefits, you must submit all your dependent care receipts before the end of the year. Some companies make it easy to submit your receipts by using apps that allow you to check your balances and file your claims. If your company uses any apps that allow you to file benefits, download them today.
Time to Boost Those College 529 Savings Accounts
If you have a 529 savings plan set up for your children's college education, you or anyone else can contribute up to $14,000 per year before the IRS hits you with the gift tax. For example, if you have set up a 529 savings account for your son, you, your spouse or anyone else, such as your in-laws, can make a contribution up to $14,000 each year before the gift tax kicks in. Make sure to keep track of your plan since there are limits to how much money you can have in each account.
Time to Donate
If you want to feel happier in your life while saving money on your taxes, then start donating some of your income. If you itemize your taxes, you can claim some of your donations, but keep in mind that you can only claim the donations in the year you made them. Make sure to keep a written account of when you made the donations.
Increase Your Workplace Donation Amounts
Some companies offer workplace giving programs, and some employers will match your donations dollar for dollar. This instantly doubles the amount of money you donate, which reduces your taxable income. However, estimates show that employees fail to claim close to $10 billion in matching contributions. Check with your employer to see if they offer a workplace giving program.
If you want to start donating, but you really do not have the money, you can use a credit card to donate this year and pay it off the following year. You can itemize the deduction on 2017 tax returns if your credit card transaction shows you made the donation this year.
If you have no cash on hand and no room to donate on your credit cards, start decluttering your life and make some non-cash donations. You can value any goods that you donate at fair market price and increase your taxable deductions. If you donate more than $500 in non-cash goods, you will need to attach form 8283 to your tax returns to prove the value of the goods you donated.
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