Overman Capital: End-of-the-Year Money Moves in 2021

What has changed for you in 2021?

This year has been very complicated for some, i.e., health issues, job changes, work-from-home challenges, inability to travel to see friends and family, virtual meeting after virtual meeting, and the list goes on. 

Did you start a new job or leave a job behind? Did you retire? If notable changes took place in your personal or professional life, then you should review your finances before this year ends and 2022 begins. Making all the right moves in 2021 might put you in a better financial position in 2022.

Even if your 2021 has been relatively uneventful, the end of the year is an excellent time to manage your overall personal finances. 

Please note, Rob and Jay highly encourage you to contact your estate planning attorney, tax professional, and financial advisor before taking action on the items below. 

Do you engage in tax-loss harvesting?

That’s the practice of taking capital losses (selling securities less than what you first paid for them) to manage capital gains. You might want to consider this move, but you should make it with the guidance of a financial professional you trust.¹

You could even take it a step further. Consider that up to $3,000 of capital losses in excess of capital gains can be deducted from ordinary income, and any remaining capital losses above that amount can be carried forward to offset capital gains in upcoming years.¹

Do you want to itemize deductions?

You may want to take the standard deduction for the 2021 tax year, which has risen to $12,550 for single filers and $25,100 for joint. If you think it might be better for you to itemize, now would be a proper time to gather the receipts and assorted paperwork.^2,3

Are you thinking of gifting?

How about donating to a qualified charity or non-profit organization before 2021 ends? Rob and Jay are active with several non-profit organizations in New Bern and can tell you firsthand how vital individual charitable contributions are to these organizations. Your gift may qualify as a tax deduction. For some gifts, you may be required to itemize deductions using Schedule A.⁴  The IRS provides several helpful resources to verify if you can deduct your charitable contribution and if the organization is tax-exempt. 

While we’re on the topic of year-end moves, why not take a moment to review a portion of your estate strategy? Specifically, take a look at your beneficiary designations. If you haven’t checked these designations for some time, double-check to see that these assets are structured to go where you want them to go if you pass away. Lastly, look at your will to make sure it is still valid and up-to-date.  

Check on the amount you have withheld. If you discover that you have withheld too little on your W-4 form so far, you may need to adjust this withholding before the year ends.

What can you do before ringing in the New Year? 

New Year’s Eve may put you in a cheerful mood, eager to say goodbye to the old year, and welcome 2022. Consider speaking with a financial or tax professional before the end of 2021 so you can fully enjoy your NYE celebration. Please do it now, rather than in February or March of 2022. Small end-of-year moves can help you improve your short-term and long-term financial situation. 

Give Rob and Jay a call today at (252) 635-6666, connect with us online, or stop by the office in New Bern to discuss these end of year moves.