Some Key Year End Tax Strategies for Individuals in 2023

Maicher CPA Pllc provides a full range of tax services to individuals as well as businesses.  The end of tax year 2023 is less than four months away and now is an excellent time for individuals to do a final review of their tax strategies with us.   Below are some key strategies we can discuss with you.  

  • Defer income.   You may wish to consider delaying asset sales or delaying receipt of other income until next year to reduce 2023 taxable income.  This may particularly apply if you expect to be in a lower income tax bracket in 2024.   
  • Review capital gains and net investment income.  If you intend to sell appreciated investments (stock, real estate, etc.) determine whether you have other assets that have decreased in value and therefore carry losses.  The losses generated by the sale of the latter can be used to offset the gains of the former.   
  • Combining deductions.  If your deductions are relatively low (less than the amount it makes sense to itemize in a single year), consider combining deductions you would normally take over 2 years into a single year. 
  • Maximize retirement plan contributions.  Consider maximizing contributions to your 401(k).  The maximum allowable 401(k) contribution for 2023 is $22,500, with a possible $7,500 additional contribution for taxpayers aged fifty and over.  The same strategy applies to contributions to IRAs and health savings accounts (HSA).
  •  Analyze whether a Roth conversion make sense.   Depending on eligibility, it may make sense to convert your IRA account into a Roth IRA if you expect to be in a lower income tax bracket for 2023 than in future years. While this transaction will result in taxable income for 2023, future income from the Roth IRA will be tax free, provided distribution rules are followed.

Take-away:  October is an excellent time to review your year end 2023 tax strategies with Maicher before the rush of the upcoming holidays.    Call us today for an appointment.  

Sources:

“8 Last-Minute Tax Filing Tips,” Forbes. (September 8, 2023).

IRS Pub. – Topic No. 409, “Capital Gains and Losses.”  (April 4, 2023).

IRS Pub. – “IRA FAQs.” (December 21, 2022).