So, you just filed your 2022 taxes. And, it's the perfect time to begin planning for 2023! We know, you may not want to hear it. But, the stress reduction that tax planning can provide is well worth the little bit of time it will take. And, it's important to begin the planning while taxes are fresh on your mind.
Here are 3 top tips to get you started planning for next year!
Max out retirement plan contributions.
In 2023, you can funnel $22,500 into your 401(k), 403(b), up from the $20,500 limit in 2022. And, if you’re 50 or older, you can increase your contribution. Your contribution limit if you are 50 or older is $30,000 in 2023, using the catch-up provision.
Choose your Tax Preparer well in advance of the tax filing deadline.
Finding the right provider is an important part of your tax planning. Because there have been so many changes to the tax laws recently, your tax preparer has gained market share. As a result, tax preparers have become overwhelmed with clients. Therefore, it's all the more important to find someone who is knowledgeable. And the IRS provides a great way to find a Registered tax preparer. They make it easier to locate someone in your area. Simply go to the IRS.gov/RPO Preparer Directory and input your zip code. There, you'll find a list of preparers near you.
Consider ‘Bunching’ deductions.
'Bunching' deductions may help you to have the opportunity to itemize deductions. The Standard deductions have increased. So, it makes it a bit more difficult to accumulate deductions in one year that exceed the current standard deduction. Bunching is when you time expenses by pushing deductible expenses into the same calendar year. For example, charity donations or prepaying January’s mortgage payment. Doubling the charitable contributions in one year plus other itemized deductions may allow a person to be over the standard deduction and itemize every other year. Additionally, you may be able to accelerate tax deductions like property tax bills or a big medical bill. It may be worth looking into.
Sources: Lenity Financial, Inc., IRS.gov, Bankrate.com, forbes.com
The views expressed in this post are as of the date of the posting and are subject to change based on market and other conditions.
Nothing in this post should be construed as an offer to sell, nor the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and should not be taken to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Lenity Financial, Inc. unless a client service agreement is in place.