End the year right

You can save quite a bit of money by taking these steps before the holiday season.

Finance: saving money

With 2017 winding down, now is a great time for Minnesotans to enjoy the holiday season.

Maybe you plan to travel to see loved ones or maybe you have them coming over to see you.

Whatever the situation, think about how much stress you alleviate when you take time to thoughtfully plan out that wonderful holiday feast or carefully work out the logistics of traveling to see family.

You can get that same boost when you make plans to make end-of-year financial moves.

If you follow these simple steps, you’ll be amazed at how much money you can save on taxes or by adding to your nest egg:

Check your contributions

When you make a contribution to a 401(k), you’re making an investment in yourself. If you’re already making a contribution, ask yourself: Does your employer offer a match? Are you at least contributing up to the amount of the company match? If not, you’re essentially leaving free money on the table.

If you do choose to max out your contributions this year, be aware of the limits. For 2017, the maximum you can contribute to a 401(k) is $18,000 or $24,000 for workers who are 50 or older. If your employer allows after-tax contributions, you can keep adding to the total — $54,000 this year, or $60,000 if you’re 50 or older.

IRAs, too

The maximum contribution amount for an IRA is $5,500 for 2017. If you’re 50 or older, you can contribute $6,500 for the year. You can also save by making contributions for your spouse.

There are a couple of rules and limitations to be aware of: A non-working spouse can make a deductible IRA contribution of up to $5,500 ($6,500 if age 50 or older as of Dec. 31, 2017) as long as 1) the couple files a joint return and 2) the working spouse earned income that equals or exceeds the sum of the nonworking spouse’s contribution plus the working spouse’s contribution.

Charitable giving

Another way to give during the holiday season, while saving on taxes, is through charitable giving.

There are a few rules to follow: Before you give, research the organization to make sure it qualifies for a tax deduction. If it does, then your contributions are tax deductible for up to 50 percent of your income. To claim your charitable deductions, you’ll need to itemize them on your 1040 tax form.

Also, be sure and keep a receipt of your deductions as proof for the IRS. And consider the following strategies with giving to charities: A DAF (a donor advised fund) works as a charitable savings account, offering the donor both flexibility and control over donations; a QCD (qualified charitable distribution) allows someone to give up to $100,000 to charity directly from an IRA, without being taxed, if the donor is older than 70½ years old.

Seeking advice 

The holiday season — and year end — is an excellent time to give.

But remember, it’s also an opportune time to make sound financial decisions for yourself, including setting up a meeting with a financial professional, who can help you efficiently and effectively work through decisions in the years ahead.

Before your appointment, make a list of the topics you’d like to cover, including your retirement accounts, tax deductions or any other questions you may have about your finances.

Following these financial tips is a great gift to give to yourself — and a gift you’ll be able to enjoy in the years to come.

Skip Johnson is an advisor and partner at Great Waters Financial, a financial planning firm with offices in Minneapolis, Richfield, Plymouth and White Bear Lake.