At Maicher CPA Pllc, we provide a full range of tax services to individuals and businesses. The end of the 2022, tax year is fast upon us and now is the time to consider possible year-end tax moves including, for example:
- Review Your Paycheck’s Tax Withholding. Has your income increased? Newly married or divorced? A new child? Purchase of a home? If any of these events apply to you, you should review your tax withholding to verify that the correct taxes are deducted from your paycheck. The IRS tax withholding estimator found on online is a handy tool to determine your applicable withholdings.
- Maximize Your 401(k) Contributions. Generally, there’s a deadline of December 31 or the date of your last paycheck of the year to contribute to a 401(k) retirement account. Maximum contributions for 2022 are $20,500, however, for those ages 50 or older, an additional $6,500 is permitted. Employer contributions don’t count toward the limit provided combined contributions for 2022 cannot exceed $61,000.
- Consider Selling Devalued Stocks. You can benefit from recognizing a loss by selling a stock that went down in value. The loss can be used to offset any capital gains for the year or be used to offset up to $3,000 of your ordinary income.
- Review Your Flexible Spending Account (FSA) to Determine Whether It’s Necessary to Zero It Out. FSAs are a type of tax advantaged savings account allowing pretax money to pay for qualified out-of-pocket expenses related to health care and dependent care. If your employer has not adopted the rollover feature or a two-and-one half month grace period following year-end, you may need to use your FSA funds by December 31. If you fail to do so, the account balance may be forfeited.
- Contribute to a Qualified Charity. Contributing to a qualified charity can generate deductions if you are taking itemized deductions. (For 2022, the standard deduction amounts are: $12,950 for single and married-filing-separately taxpayers, $19,400 for head of household taxpayers and $25,900 for married-filing-jointly or qualifying widow(er) taxpayers.). Before contributing, however, verify that the organization can receive tax-deductible donations by checking the IRS’ Tax Exempt Organization Search Tool, found at https://www.irs.gov/charities-non-profits/tax-exempt-organization-search.
Take-away: Some timely tax moves now can save you money in 2022. Call us at Maicher before time runs out on 2022 to see how you might reduce taxes this year.