SMOOTH YEAR-END MONEY MOVES

Follow these strategies to save money and shape up your personal finances. But act before New Year's Eve or you'll be late to the party.

TRIM YOUR 2022 TAX BILL

Don't buy a tax liability. During the month of December, many mutual funds pay out dividends and capital gains that have built up during the year. If you own shares on what's known as the ex-dividend date, you'll have to pay taxes on the payouts, even if you reinvest the money.

Given the poor performance of the stock market this year, you may not think this will be a problem. But some funds are still sitting on large gains from 2021 and may have been forced to sell some of those winners to meet investor sell orders. So you could get hit with a capital gains distribution even if your fund lost money this year.

Mutual funds typically publish an estimate of their capital gains distributions in November or December, along with the date of the distribution. Estimates are on a per-share basis, so if you figure out how many shares you have, you can gauge the size of your distribution.

If you get hit with a distribution, review your portfolio to see if you have any mutual funds, stocks or bonds that have declined in value since you purchased them. Selling them before year-end will provide losses to offset your gains. And if you’re planning to shop for fund shares that have been beaten down in the bear market, call the fund company or check its website to get the date and estimated amount of year-end distributions before you buy. The estimates are often reported as a percentage of a fund’s current share price. A distribution of 2% to 3% of the share price probably won’t cause you a lot of tax headaches, but if the fund estimates it will pay out 20% to 30% of the share price, wait until after the distribution to buy—or consider investing in a different fund. SANDRA BLOCK