As the end of 2022 approaches, it’s time to assess your wealth plan and ensure you’re taking advantage of all available tax benefits.
With potential changes in legislation and uncertain economic conditions, now is the time to assess any shifts in your goals or circumstances that could affect your 2022 taxes and investments. If you don’t stay on top of these developments, you may miss out on valuable opportunities to save.
Only let the clock strike midnight after reviewing your plan. Take this time to review our checklist and ensure your wealth plan is up-to-date and in line with current tax laws. Consider making adjustments if necessary, such as adjusting the timing of investments or planning for deductions that could reduce your taxable income.
Income Tax Planning Tips
- If you find yourself in the 32%, 35%, or 37% tax brackets, accelerating itemized deductions may be beneficial. This will be particularly helpful if your total itemized deductions exceed the standard deduction, as those deductions could be capped at a 28% tax benefit in future years.
- If you believe that higher tax rates could make deductions more valuable in the future, deferring them until later may save you money down the road.
- With the year-end fast approaching, now is the time to accelerate income into 2022 to avoid potentially higher tax rates in 2023.
- The annual gift exclusion for 2022 allows for tax-free gifts of up to $16,000 per donee without reducing your lifetime gifting exemption. This is an excellent opportunity to transfer wealth to future generations or make tax-free transfers on behalf of another person by paying for their education costs or medical expenses directly. Now is also a great time to review your estate plans and make any necessary changes.
Donations & Charitable Giving
- If you’re looking for the most significant tax benefit from your charitable contributions, a great strategy is to combine multiple years of giving into a single tax year. In doing so, you’ll be able to exceed the standard deduction threshold and fully deduct all of your contributions. This allows you to maximize your return and receive the full effect of giving back while reducing your taxable income.
Retirement Planning
- When it comes to retirement savings, think of the sky as the limit! Contributing to accounts such as 401(k), traditional IRA, Roth IRA, SEP, and Simple can provide you with a significant tax break while also ensuring your financial security.
- At age 50 or older, remember to make catch-up contributions of up to $6,500 for added benefits. Keep in mind that legislation may restrict the size of these accounts in future years, so act now and maximize your retirement contributions.
Get Help With Your 2022 Year-End Tax Planning
The best time to review your tax plan is now. At Bennett Bennett & Trice, PLLC, our knowledgeable and experienced team is ready to assist you in making the most of all available deductions and credits.
Our checklist above gives you a solid foundation to start the 2022 year-end tax planning process. Remember to review your goals, adjust, and take full advantage of available tax savings opportunities.
Contact us today if you have any questions or want to discuss your taxes. We look forward to helping you maximize your wealth potential and ensure success in the new year.
