Money moves to close out the year

It's the most wonderful time of the year — time to make money-saving and headache-preventing moves before we roll into 2020.

Think about April now: Use the IRS's withholding estimator to see if you have enough money set aside to pay your tax bill in April. If you need to increase your withholding, contact your payroll department immediately. If you are self-employed and no organization is withholding taxes, you should be making quarterly tax estimates to avoid the dreaded April surprise. If you have not done so, now is the time to figure out what is due so you can address it. Determine whether you can itemize: Although 90% of taxpayers claim the standard deduction, it's worth checking to see if that will be the case for 2019. If you purchased a house in an area with high local taxes, have assumed a mortgage or were especially charitable this year, you may benefit from itemizing. Given the higher standard deduction threshold, consider bundling or bunching charitable gifts, whereby you give larger, lump-sum gifts. Doing so may allow you to itemize and capture the tax benefit associated with giving.

Slash your tax bill with Uncle Sam’s help: The best way to reduce your tax liability is to maximize your retirement plan contributions. If your cash flow allows, try to increase your contributions before the end of the year. If you are self-employed or have made extra money from a gig, consider establishing your own retirement plan. Most plans, with the exception of a SEP-IRA, must be established (though not funded) by Dec. 31.

Rebalance thoughtfully: If you itemize and have a taxable investment account, you need to spend time on your rebalancing. Start by identifying highly appreciated securities that you can gift to qualified charities, which allows you to write off the current market value (not just what you paid) and escape taxes on the accumulated gains. You can also sell investments with losses to offset gains during the year. If you have more losses than gains, you can deduct up to $3,000 against ordinary income; and if you have more than $3,000, you can carry over that amount to future years.

Take required minimum distributions: You must withdraw money from retirement accounts after you turn 70 ½, unless you are still working. Failure to do so results in a 50% penalty on the amount you should have taken. If you have multiple IRAs, you only need to take one RMD based on your age and the total value of the accounts. If you have a 401(k) or 403(b), you need to take the RMD from each account individually.

Consider a Roth conversion: If your income was lower in 2019, if you believe that tax rates are likely to rise in the future, or you want to limit the impact of RMDs in the future because it could negatively impact future taxation of Social Security benefits or increase Medicare costs, consider converting a traditional IRA into a Roth IRA. Check out IRS tax brackets, because the amount you convert will add to your taxable income. Once you pay the tax due, the converted money will grow tax-free in a Roth.