• Taxes & Insurance

5 Money Moves to Make Every Tax Season

March 28, 2017 | John Schneider

Like New Year diets and birthday cakes, there are some things we should try to incorporate into our lives every year. Whether it’s for fun, fitness or our finances, we usually end up better off because of them. And it’s often helpful to have firm, recurring dates to prompt us to think about these things. For example, tax season comes every year and can serve as a great reminder to exercise some good financial habits.

Now that we’re in the heart of yet another tax season, here are five money moves you can develop to improve your finances and peace of mind.

Confirm Your Portfolio Allocation

Buy and hold is a passive investment strategy (unlike an active one, like day trading) in which investors hold positions for a long time regardless of the ups and downs of the market. For investors who exercise this type of investment strategy, tax season is a perfect reminder to rebalance their portfolios.

Even though buy-and-hold investors aren’t actively trading, that doesn’t mean they shouldn’t review their accounts to maintain proper portfolio allocations. Different markets, such as large cap and international investments, as two examples, don’t move in tandem. Therefore, buy-and-hold investors should adjust their portfolio allocations to stay in line with pre-established risk tolerances, time horizons, and investment objectives and goals.

Confirm Your Beneficiaries

You should think about confirming the beneficiaries on your investment accounts annually. Beneficiary designations supersede instructions in wills, which is a technicality that catches many by surprise.

Unfortunately, many forget to change their beneficiaries as their relationships change. If you leave your ex-partner or ex-spouse as a beneficiary on your investment accounts, they have the legal right to the assets in those accounts when you pass away. Your will designating your current partner or spouse as the heir does not supersede beneficiary designations you assigned prior to your current relationship.

Cases come up too frequently that could have been avoided had a deceased partner updated the beneficiary information. For this reason, verify and update your beneficiaries as necessary every year and use the tax season as a reminder.

Confirm Your Power of Attorney

Each year, you should double check your financial and medical powers of attorney. A financial power of attorney designates an agent to manage your financial matters, whereas a medical power of attorney designates someone to manage your medical needs.

Financial and medical powers of attorney both allow for standard durable powers of attorney or springing powers of attorney. A standard durable power of attorney authorizes an agent to, immediately upon authorization, act on your behalf, including if you become temporarily or permanently incompetent or incapacitated. This type of authorization ceases when you pass away.

Springing powers of attorney, on the other hand, authorize an agent to act on your behalf only if certain conditions are met, typically if you become permanently incapacitated, as determined by a medical doctor. It, too, ceases when you pass away.

Because such agent powers carry heavy responsibilities, confirm the appropriateness of each agent each year when you file your taxes.

Check Your Credit Report

Creating good credit habits, protecting yourself from identity theft, and keeping tabs on your credit score can feel like a full-time job. With systems in places, though, it’s a little easier.

Review all your credit card, debit card, bank, and investment account statements regularly to confirm nothing untoward happens from month-to-month. If you see negative or inaccurate transactions, contact your respective financial services firm immediately.

[Download Personal Capital’s free tools to easily manage your entire financial life in one secure place.]

An added layer of protection for your credit score is to review your credit report annually. This is an opportunity to contest or clean up inaccurate items on your credit report, and to confirm you didn’t miss anything in your month-to-month reviews.

An added layer of protection for your credit score is to review your credit report annually. This is an opportunity to contest or clean up inaccurate items on your credit report, and to confirm you didn’t miss anything in your month-to-month reviews.

Consumers are entitled to one free credit report a year from each of the three credit rating agencies, Equifax, Experian, and TransUnion. Rather than contacting all three credit rating agencies yearly, simply go to AnnualCreditReport.com to request your free credit report from each agency all at once when you file your taxes.

Confirm Your Emergency Contact Information

If you haven’t already done so, create a list of important contacts with their contact information. This will help your family should you become incompetent or incapacitated. Every year when you file your taxes, update this list for accuracy. This list should include, but not be limited to:

  • Attorneys
  • Accountants
  • Financial advisors
  • Doctors
  • Executors
  • Power of attorneys
  • Spouse
  • Children
  • Parents
  • Siblings
  • Heirs

Companies such as Docubank and Carbonite for Home let you electronically store this and other legal documents, such as healthcare directives and emergency medical information, so they’re stored in a safe and easily accessible location. This will make it much easier for your family and/or heirs to manage the more important financial initiatives should they need to.

It can sometimes be hard to maintain important aspects of our finances without having systems in place, especially those that are often overlooked or forgotten. By implementing a system to regularly address these important topics, you can build your way to a stronger financial future and a more peaceful state of mind.

This blog is for informational purposes only; we are not in the business of providing tax or legal advice and we generally recommend seeking the advice and counsel of a tax professional before taking any action that may cause a material taxable event

Get Started



Get to know your money

"APP STORE STAFF PICK" – ITUNES