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DM 76 - Things You Need To Do Before 2023 Ends



What are things you have to do before the end of the year and what things can actually wait in your personal finances? Hey, it's Jon from Financial MD, welcome to today's didactic minute.

 

As we're getting into December – today's December 1 of 2023 – so, whenever you see this, hopefully, it's before the end of the year, what are things that you need to do before the end of the year and what are things that you can wait on? Because there's some confusion around that. The big thing that we get questions on are IRA contributions and Roth IRA contributions. Either one – whichever one you're doing – even if it's a backdoor Roth, the contribution actually doesn't have to happen until tax day of the following year. You can count it for what's called a prior-year contribution. Now doing the Roth conversion when we're talking backdoor Roth – and look at previous videos to see what that is and how to do that – a backdoor Roth conversion part needs to actually happen in the year for it to be counted in that year, and whether some of that will be taxable or not – that's the question. Now if this is your last year of residency or you have just started your first year of attending, this is the year when most of our residents and attendings are considering taking the 403(b) or 401(k) that they got in residency and converting it to a Roth. For a lot of people, that makes sense because you're going to be in the lowest tax bracket you'll ever be in again. So you pay the tax HIT now; now it's in a Roth forever and tax-free forever. So that's something to think about and you'll have to get that done before the end of the year. So, let us know if you got questions on that. We've helped a ton of people do that. So IRAs are the big thing. The other thing that you do need to do before the end of the year if you want the tax deduction is charitable contributions -- so donating to charity, tithing, giving to a nonprofit, or 501(c)(3). If you want to pay less in taxes and you're itemizing your taxes which is another conversation for another didactic minute, so you're not taking the standard deduction, your charitable contributions actually count, you've got to do that before the end of the year. You can't do it on January 1 and backdate it or any of that kind of stuff. So, those are things that you have to know. Now if you're not sure where that can go but you want to get the tax deduction, there are things called donor-advised funds which are basically you put the money there and you decide where it goes later, but you get the tax deduction now. So Schwab has them; Fidelity has them; Pershing – pretty much every custodian has them and so you should be able to find them. Vanguard probably has one. So, shoot us a question if you got a question on that or comment below. These are things that you need to know before the end of the year. This is not all-encompassing. I'm sure there are others, but I wanted to get a couple of quick ones out. Hopefully, you see this before the end of the month with time to get some of these things done.

 

So, be sure to share this and like it. Let somebody know. Do one of your colleagues a favor and let them know that Financial MD is out there. There's a ton of free information. The podcast episodes are still happening. Every other week, we're trying to get out a good conversation between me and Dr. Trevor Smith, or some other guest that's going to give you some insight into how to make smart financial decisions as a young physician. So, check that out. That's called The Financial MD Show, and if you want to see the whole list of free resources we've got, go to financialmd.com.

 

This is Jon from Financial MD, we'll see you next time.

 



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