3 money tasks you need to do right now

The Detroit News - - ARTS& STYLE - Nerdwal­let

Most fi­nan­cial to-do lists fo­cus on what you need to get done by Dec. 31, but there’s also a brief win­dow early in the new year to save your­self some sig­nif­i­cant cash. Here are three tasks to con­sider do­ing now:

1. Avoid tax penal­ties

If you live in a high-tax area, have a bunch of chil­dren or oth­er­wise take a lot of de­duc­tions, you may face an un­pleas­ant sur­prise on April 15. It won’t just be a big tax bill. You may also face penal­ties for not hav­ing with­held enough taxes in 2018.

Some peo­ple “are go­ing to be in re­ally sad shape,” says Cari We­ston (no re­la­tion), di­rec­tor of tax prac­tices and ethics for the Amer­i­can In­sti­tute of CPAs .

Tax ex­perts say many peo­ple are still un­aware of how many tax rules have changed. Per­sonal ex­emp­tions no longer ex­ist, for ex­am­ple, which can be a prob­lem for peo­ple with many de­pen­dents. Peo­ple also can only deduct up to $10,000 of state, lo­cal and prop­erty taxes com­bined, when there used to be no limit.

Free in­come tax cal­cu­la­tors can help you es­ti­mate your tax bill, or you can turn to a tax pro.You may face a penalty – es­sen­tially in­ter­est on the amount you should have paid, but didn’t – if you’ll owe more than $1,000 on April 15, We­ston says. But there may still be time to avoid it.

Most peo­ple can dodge the penalty if their with­hold­ing in 2018 at least equaled the to­tal tax they owed the year be­fore (that’s the amount shown on line 63 of your 1040 form for 2017). Peo­ple with ad­justed gross in­comes over $150,000 must have with­held at least 110 per­cent of the pre­vi­ous year’s tax.

Those who with­held too lit­tle can still avoid the penalty by mak­ing an es­ti­mated tax pay­ment by Jan. 15. In­struc­tions are on the IRS’ pay­ment page .

2. Con­sider front-load­ing your med­i­cal ex­penses

Sched­ul­ing rou­tine health ap­point­ments and screen­ings early in the year helps make sure they get done. You could catch prob­lems be­fore they get big­ger and more ex­pen­sive.

Front-load­ing your costs can also help if you have big med­i­cal ex­penses later in the year.

Most health in­sur­ance comes with out-of-pocket max­i­mums, which is the most you’re ex­pected to pay in a year count­ing co-pay­ments, de­duc-

tibles and coin­sur­ance amounts but not count­ing pre­mi­ums. The av­er­age out-of-pocket max­i­mum for em­ploy­er­pro­vided health plans was $3,872 for a sin­gle per­son in 2018, ac­cord­ing to the Henry J. Kaiser Fam­ily Foun­da­tion. Once you hit your plan’s limit, your in­sur­ance typ­i­cally starts pick­ing up the en­tire bill for med­i­cal care for the rest of the year.

If you have a flex­i­ble spend­ing ac­count for med­i­cal care through your em­ployer, drain­ing it early in the year can be a good plan. Al­though pay­ments for FSAs are de­ducted from your pay­check through­out the year, you don’t have to con­trib­ute the money be­fore you can spend it, says San­der Do­maszewicz , prin­ci­pal at con­sult­ing firm Mercer. You can sub­mit claims and be re­im­bursed for the full amount you’re sched­uled to con­trib­ute for the year (up to $2,700 in 2019 ) at any time. If you lose your job or quit, you don’t have to pay back the dif­fer­ence be­tween what you’ve con­trib­uted and what you’ve spent.

3. Set up (or ad­just) your sav­ings buck­ets

“Sav­ings buck­ets” are sav­ings ac­counts for a spe­cific pur­pose, such as va­ca­tions, prop­erty taxes, life in­sur­ance pre­mi­ums, car re­pairs and so on. You fig­ure out roughly how much money you’ll need and when, then set up au­to­matic trans­fers so the money is there when you need it. Hav­ing the cash on hand means you don’t have to charge it (and pay high credit card in­ter­est rates) or take out ex­pen­sive loans.

Some peo­ple who do this have a sin­gle sav­ings ac­count at a tra­di­tional bank, us­ing a spread­sheet to keep track of how much has been ac­cu­mu­lated for each pur­pose. But on­line banks make it eas­ier and more in­tu­itive. These banks typ­i­cally al­low you to set up mul­ti­ple sub-ac­counts, with la­bels you choose, and don’t charge monthly fees or re­quire min­i­mum bal­ances.

If you’re al­ready sav­ing for non­monthly ex­penses, see if you need to tweak the amounts. Prop­erty taxes typ­i­cally go up ev­ery year, for ex­am­ple, but you may have to save less for car re­pairs if you re­cently bought a newer ve­hi­cle.

A few min­utes spent on these chores now could save you money, time and stress through­out 2019.

LIZ WE­STON

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