Six year-end finance tips

1. Claim All Your Flexible Spending Money

- Use up flex-spending account balances your plan year runs out. Consider buying eyeglasses, contact lenses, diabetic supplies, refilling prescriptions, or paying outstanding medical bills.

- Don't buy a bag of over-the-counter drugs to use up your balance. New IRS standards in 2011 for over-the-counter state, "the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained." This change does not affect insulin, even if purchased without a prescription, and other health care expenses such as medical devices, eye glasses, and contact lenses.

2. Increase Your Final 401(k) Contribution

If you haven't already contributed the maximum of $16,500 to your 401 (k) - or $22,000 if you are 50 or older - consider increasing your contribution amount from your final 2011 paycheck.

3. Make an Extra Mortgage Payment

- While this may not be realistic for everyone, making one extra payment can help you maximize on your 2011 itemized deductions.

- It will also have the added benefits of reducing the total amount of interest you will pay and the number of payments over the life of the mortgage.

4. Check Required Minimum IRA Distributions (RMD)

- If you have an IRA and you are older than 70.5, you must take your RMD before year's end.

- Failure to comply could cost you big time. The amount not withdrawn is taxed at 50%.

5. Balance Capital Gains and Losses

- Rebalance and reassess your investment portfolio prior to year-end.

- Minimize your capital gains taxes by selling your underwater securities to offset your gains.

6. Seasonal Gifts

- You can give up to $13,000 a year to individuals without triggering gift tax. The $13,000 exclusion applies to each person you wish to gift. And, some gifts for educational or medical expenses are also excluded from gift taxes if you pay the institutions directly.

- Gifts to charitable organizations are excluded from gift taxes and have the additional benefit of reducing your taxable income if you itemize deductions. So, be as generous as you can afford to be.

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