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Year-end financial checklist

10 essential to-dos to wrap up your 2021 finances.


Last updated: July 12, 2022 |

Article published: November 1, 2021

We know the end of the year is always busy between the holidays, traveling and spending time with loved ones, but it isn’t the time to neglect your finances. If you coast through the holidays, you could miss key deadlines and money-earning or tax-saving opportunities. We’ve created this year-end financial checklist to be an easy yet essential guide to wrapping up your finances (no holiday gift pun intended).


Use any remaining Flexible Spending Account balances.

Make sure you use up any remaining funds in your Health Savings Accounts, Flexible Spending Accounts for child care and dependent care, and transportation accounts. Typically, the expenses for which you’re being reimbursed for  must have occurred in 2021.

Some plans offer greater flexibility. Check to see whether your plan allows you to file for reimbursement of 2021 expenses after the start of the new year (funds typically give you 90 days to file). Plans may also allow you to roll funds over for use in 2022 or allow you to use 2021 dollars to pay for expenses that you incur in 2022.


Maximize retirement plan contributions at work.

Make sure you put as much as you can into your employer-sponsored retirement plan, such as a 401(k) plan. You can contribute up to $19,500, or $26,000 if you are 50 or older. This includes any employer-matched contributions.


Make charitable contributions now to get 2021 tax deductions.

This is a key item on your year-end financial checklist because of the strict deadlines. Donations must be dated before Dec. 31. Stock donations to charities must be completed by then, too. Donating stock not only can provide you with a tax reduction, but it can let you avoid capital gains tax on the appreciated asset. And don’t worry, it doesn’t fall on the charity either because they are tax-exempt. Tangible gifts must also be received by the charity by Dec. 31 – make sure to keep a detailed list of what was donated for any gifts of this type.

If you think you might be in a lower tax bracket next year, you may want to consider accelerating your charitable contributions to this year to get more money from deductions.


Reimburse yourself for college expenses from your 529 college savings plan.

The expenses for which you’re being reimbursed this year must have occurred in 2021.


Review your annuity exit strategy.

If you die with annuities in your estate, your beneficiaries will be taxed at their ordinary income rates. A better option is to take distributions postretirement, when your tax rate is lower. So if you’re retired – or planning to retire in the near future – it’s a good time to review your annuity exit strategy. If you are charitably inclined, another option to consider is changing the beneficiary of the annuity to a charitable organization – as it will not have to pay tax on the distribution.


If you are an entrepreneur, set up a solo 401(k).

This account is also known as a Self-Employed 401(k) or an Individual 401(k). This can help you save a great deal on taxes and maximize your retirement savings. You must set these accounts up by Dec. 31.


Carry out transactions that can lower your 2021 taxes.

Review your portfolio and consider selling stocks or funds that have decreased in value at a loss. If you sell a stock or a fund at a loss, you can write off those losses on your taxes against any gains. This may likely already be part of your own year-end financial checklist for when you meet with your financial advisor. He or she should be able to provide recommendations that could benefit your long-term investment strategy.

Also, check on medical expenses and other tax deductions. You can only deduct certain expenses after they exceed a certain percentage of your Adjusted Gross Income – for example, medical expenses must exceed 7.5% of your AGI – so you may want to accelerate those payments into this year or schedule them for next year.


Consider making financial gifts to your children or grandchildren.

You can give up to $15,000 to any one person each year without paying a federal gift tax. For example, you could give $15,000 to your daughter and $15,000 to her husband, and your spouse could do the same, for a total of $60,000 ($15,000 x 4).

If you go above that limit, say $50,000 to help a child with a down payment on a home, you most likely won’t have to pay more taxes, but you will have to file an additional form with the IRS: the Gift Tax Form 709. For couples filing a joint return, the gift tax form threshold is $30,000 for an individual when the money is coming from separate accounts from the husband and wife.


Consider whether you should withdraw funds from your IRA.

If you are older than 72 or have an inherited IRA, you must take money out as a Required Minimum Distribution based on age and marital status. If you don’t take out enough, the IRS will fine you 50% of the amount you were supposed to withdraw but didn’t. That is in addition to the taxes you already owe on the distribution. So, if you didn’t take out $10,000 that you were supposed to on the RMD, the IRS can take away $5,000.

If you are older than 59½ and in a bracket that is lower than normal this year, consider taking money out of your account this year. Just make sure you don’t take out an amount that would bump you into a higher tax bracket.


Seek the advice of a financial planner.

You didn’t think we could leave this off our year-end financial checklist, did you? Talk with an advisor about your wealth management goals for 2022 and beyond. A financial planner can work with you to create or update your personal financial plan to help you achieve financial freedom.

If you aren’t already working with a financial advisor, consider setting up a no-cost, no-obligation meeting to discuss your financial goals with one of our fiduciary financial planners – one who will always put your best interests first. We can work with you to create a long-term strategy to help you secure the retirement you deserve.


Neither Edelman Financial Engines, a division of Financial Engines Advisors L.L.C., nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.


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