Are you ready to close out 2011?

Year-end is characterized by family, friends and celebration, but if you can pull yourself away from the merriment for a bit to do the below financial diagnostic before you bring in the New Year, it could pay off in spades.

Spend your Flexible Spending Account (FSA): Any money left in your
FSA at year-end is gone forever, so check your balance and look for ways to
use it.

Pay your state income taxes: You may be eligible to use your state income tax payment as a tax deduction if you pay it before year-end.

Prepay your property tax: Property taxes are a tax deduction, so consider paying your 2012 property taxes this year.

Make your charitable contributions: If you are charitably inclined and can use the tax deduction, be sure you make your contributions by year-end to be captured on this year’s tax return.

Give money to those you love: The annual gift exclusion allows you to give up to $13,000 to as many people you want in 2011 without a tax implication to you or the recipient. This can be a great way to help family members while reducing your estate if you are worried about estate tax.

Take your required minimum distribution: If you are subject to a required minimum distribution (RMD) from your retirement assets, unless it is your first RMD, you need to take the distribution before year-end or suffer a 50% penalty on the amount you should have taken.

Take investment losses: If you have realized investment gains for the year, now is the time to take some losses to offset those gains. If you overdo it, $3,000 in losses can offset income and any excess is carried forward.

Maximize retirement plans: Aside from some retirement plans like IRAs, which permit contributions until April 15th, others like 401(k)s and 403(b)s only permit contributions through year-end, so your year-end paycheck is your last opportunity.

Review your W-4: If you are having too much withheld from your paycheck you are simply giving the government an interest free loan and if you aren’t having enough withheld you may be subject to penalties, so be sure you W-4 elections are accurate.

Review your debt: With interest rates at amazing lows it is a good time to review any mortgages, credit card debt, auto loans and school loans to see if there are opportunities to consolidate or refinance.

Inventory your estate plan: Check that you have a Will, a General Power of Attorney, a Health Care Power of Attorney and if appropriate, a Trust.

Review the key people of your estate plan: Ensure the people you have selected as guardians, conservators, executors, trustees, general power of attorney, health care power of attorney and successor 529 plan owners are as you wish.

Review the beneficiaries of your estate plan: Ensure the people who are in line to receive your tangible and intangible assets are as you wish and that they will receive them as you wish (i.e. outright or at a certain age).
Review your insurance coverage: Dust off all of your insurance declaration pages to ensure they are still commensurate with you needs for protection.

Review your investment asset allocation: Asset allocation is your mix of stocks, bonds, cash, real estate and alternative investments. As markets oscillate, your asset allocation can go askew, so check to see if rebalancing your asset mix is appropriate to better align it with your needs.

Review your investment asset location: You’re not reading the same thing twice! This is location, not allocation. Asset location is placing your various investments in the right portfolio for tax advantages. For instance, investments that generate income and are taxed at your marginal rate are generally better off being placed in retirement accounts that defer or avoid tax. On the other hand, investments that generate capital gains, which are taxed more favorably, should be placed in taxable accounts as opposed to tax deferred accounts in which capital gains are converted into income.

Review your life goals and values: Money is not a goal, but rather a resource to achieve your goals. Revisit what is important to you in life and do a sanity check on your financial affairs to ensure they are congruent with what you are trying to accomplish.

Each of these items are highly dependent upon individual circumstances, so be sure to review these considerations with your financial, tax or legal advisors.

Contributed by Kevin Mahoney, CFP^®, Integris Wealth Management