Weekend Reading: 10 Tax Planning Tips for the End of the Year

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading year end tax tips Weekend reading year end tax tips
Weekend Reading

As 2023 quickly approaches, analyzing the tax impact of any financial moves you plan to make before year’s end is key.

In efforts to help keep more of your money out of the hands of the IRS, some of the steps listed here you might want to consider include:

📌 Consider paying 2023 bills now: If you have a good idea of what you will itemize for 2022, or plan to claim the standard deduction upon filing next year, it might be wise to prepay deductible expenses, such as mortgage payments or state taxes due in January. You may also want to review unreimbursed medical bills or pay property taxes early so they can be deducted for 2022.

📌 Reap the tax harvest: Investments you have held for a year or more are taxed at the long-term capital gains rate, but tax loss harvesting allows you to “sell investments that have fallen below your purchase price [so that you can use] the resulting loss to offset capital gains in taxable accounts.”

📌 Max out your employer’s retirement savings plan: If you are still saving in a 401(k) or 403(b), you can contribute up to $20,500 in 2022, with an additional $6,500 in catch-up contributions if you are age 50 or older.

📌 Transfer IRA money to charity: Each year, individuals 70 ½ or older can directly transfer up to $100,000 from a traditional IRA to a charity tax-free. For IRA owners aged 72 or older, this distribution can also count as your RMD.

📌 Consider a Roth conversion: Converting money from a traditional IRA to a Roth IRA at the top end of your income bracket now, versus later, makes it more likely you’ll save on taxes.

The clock is ticking:
If you missed out on tax planning opportunities last year, you have a limited amount of time left to execute this year. Don’t let it happen again.