Tips for Reducing Your Taxes in 2022

At Maicher CPA Pllc, we provide a full range of tax preparation services to help businesses and individuals succeed.   Intelligent tax strategies can reduce your tax bill.  Below are several tips. 

  1. Adjust Your Withholding/Estimated Tax Payments.   If you are an employee and you had a large tax bill in 2021, adjust your W-4 form to make sure enough money is being withheld from your paycheck.  Use the IRS tax withholding estimator to complete the form.  Similarly, if you are self-employed and had a big tax bill, confer with us to calculate your estimated quarterly payment amount.   
  2. Maximize Your Contributions to Tax Favored Accounts.  Maximize your contributions to your retirement accounts. For 2022, you can contribute up to $20,500 to an employer-sponsored 401(k) plan ($27,000 if you’re 50 or older).  If you don’t have a 401(k) plan, then you can contribute up to $6,000 to a traditional IRA ($7,000 if you’re 50 or older).  Similarly, if you have a high-deductible health care plan, you can contribute to a health savings account (HSA) which is a tax-advantaged savings account permitting taxpayers to set aside money to pay for qualified medical expenses.  For 2022, the maximum HSA contribution is $3,650 for individuals and $7,300 for families. 
  3. Utilize Tax Credits.  Deductions reduce how much income is taxable, while tax credits offset taxes owed.   Review commonly overlooked tax credits, like the adoption tax credit, the saver’s credit and the earned income tax credit (EITC).   For example, the EITC is generally available to workers without qualifying children who are at least 19 years old with earned income below $21,430 for those filing single and $27,380 for spouses filing a joint return. The earned income tax credit is worth up to $6,728 and families with more children are eligible for higher credit amounts. 
  4. Minimize Capital Gains Tax.   Capital gains tax arise when you sell certain assets like stock or real estate for more than you paid for it.  For example, if you buy stock for $10,000 and sell it for $5,000, you owe tax on $5,000 of capital gains.  However, the tax rate paid on that gain depends on how long you owned the stock and your total taxable income. For assets owned for a year or less, the gain is taxed at ordinary income tax rates ranging from 10% to 37%. However, if the asset is owned for more than a year, it’s a long-term capital gain taxed at more favorable long-term capital gains rates.  In 2022, individual filers pay no capital gains tax if their total taxable income is $41,675 or less. The rate increases to 15 percent on capital gains for incomes between $41,676 and $459,750. Above $459,750, the rate is 20 percent.

Take away:   Intelligent tax strategies can reduce your tax bill.  At Maicher CPA Pllc, we provide effective tax advice and tax return preparation services minimizing tax bills for individuals and businesses.  Contact us today to discuss how we can reduce your tax bill for your 2022 return. 

Sources:

“8 Tips To Reduce Your Tax Bill For The Next Tax Season,” Forbes (July 25, 2022).

“13 Ways to Save Money on Your Taxes in 2022,” US News and World Report (March 4, 2022).

“What Are The New Capital Gains Rates For 2022?” Forbes (February 7, 2022).

IRS Publication – Earned Income and Earned Income Tax Credit (EITC) Tables (July 28, 2022).