There are still three weeks left in December before the end of the year, allowing you time to make these key tax moves to improve your bottom line for 2022.
Tuesday, April 18, 2023, is the deadline for paying your 2022 taxes. As of this writing, there are still three weeks left for several key financial deadlines that occur on December 31.
Here are four crucial tax strategy moves you need to complete by Dec. 31 or sooner to claim them on your 2022 tax return, according to CNBC.
December 31 is the deadline for contributions for workers who have a 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan to contribute up to $20,500 for 2022, Yahoo Finance reported.
If you haven’t maxed them out for 2022, you still have time – if you act fast – to boost your contributions with one or two pay periods remaining in the year. Keep in mind that increasing your contributions may lower your adjusted gross income, but it will pad your retirement savings.
December 31 is the deadline for charitable contributions to qualifying organizations under section 170(c) of the Internal Revenue Code. However, if you take the standard deduction on your tax return, you can’t claim itemized write-offs for charitable gifts. For 2022, the standard deduction is $12,950 for single filers or $25,900 for married couples filing jointly.
For those itemizing their tax deductions, you may want to consider gifting profitable investments or selling losing assets before donating the cash proceeds, CNBC suggests.
For those aged 70½ or older, you can make a direct transfer from a traditional individual retirement account to a charity to reduce adjusted gross income.
If you have a health savings account (HSA), which allows you to put money aside for qualifying health expenses tax-free if you have a high deductible health plan. Maximum contribution amounts for 2022 are $3,650 for self-only and $7,300 for families. If you are 55 or older, the annual “catch-up” contribution is $1000.
Technically, the deadline isn’t the end of the year, you have up until tax filing day of April 18, 2023, to contribute to an HSA. However, you must be enrolled in an HSA-eligible health plan as of December 1, 2022.
You can minimize taxes on stock gains by selling off stocks or bonds (other than municipal bond funds) that took a dive in value in 2022. Those investment losses can offset your gains. If your losses exceed your gains, you can put up to $3,000 in losses against other income, Yahoo Finance reported.