It’s a great practice to participate in year-end tax planning. Not only does planning equal fewer surprises, but it also gives you the opportunity to discuss your situation with your accounting team and make adjustments as needed.
For example, by thinking ahead, your accounting team may be able to implement tax strategies such as deferral or acceleration of income, prepayment or deferral of expenses—and more—that can help you save taxes and strengthen your financial position.
Beyond minimizing your tax bill, year-end tax planning also enables you to identify your financial planning needs, get your tax questions answered, and make sure you’re on a solid path to retirement.
Tax planning and financial topics
Here’s a run-down of important things to discuss with us or your accounting team during your year-end review.
- Major changes in your life:
- Marriages or divorces
- Births or deaths in the family
- Job or employment changes
- Starting a business
- Significant expenditures (real estate purchases, college tuition payments, etc.).
- Consider tax benefits related to using capital losses to offset realized gains and move any gains to the lowest tax brackets, if possible.
- Make sure you’re appropriately planning for estate and gift tax purposes. There is an annual exclusion for gifts (For 2022 $16,000 per donee, $32,000 for married couples) to help save on potential future estate taxes. (For 2023 $17,000 per done, $34,000 for married couples)
- Consider Sec. 529 plans to help save for education as can be income tax benefits available to you.
- Consider any updates needed to insurance policies or beneficiary designations.
- Discuss tax consequences of converting traditional IRAs to Roth IRAs.
- Review withholding and estimated tax payments and assess any liquidity needs.
Tax Planning Updates
Teleworking May Impact State Tax Obligations
The pandemic has changed how people work, and more people are permanently working from home (i.e., teleworking). Remote working arrangements could potentially have tax implications that should be considered by you and your employer.
Fraud Remains a Significant Threat
Our firm takes data security seriously, and you should too. Fraudsters continue to refine their techniques; as a result, tax identity theft remains a significant concern.
Beware if you:
- Get an unsolicited email or another form of communication asking for your bank account number, other financial details or personal information
- Receive a robocall insisting you must call back and settle your tax bill
- Receive a notice or letter from the IRS regarding a tax return, tax bill or income that doesn’t apply to you
The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information.
Make sure you’re taking steps to keep your personal financial information safe. Let us know if you have questions or concerns about how to protect your personal information.
Keep in mind that you can claim disaster-related losses on your tax return if this applies to you:
- Located in federally declared disaster area
- Suffered uninsured or unreimbursed disaster-related losses
If you are eligible, you can choose to claim disaster-related losses on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or on the return for the prior year (2021) for a quicker refund.
Also, if you were in a federally declared disaster area, you may want to settle an insurance or damage claim in 2022 to maximize your casualty loss deduction this year.
Retirement planning considerations
We recommend you review your retirement situation at least annually. This includes making the most of:
- Tax-advantaged retirement saving options, such as traditional IRAs,
- Roth IRAs
- Company retirement plans.
Also consider taking advantage of health savings accounts (HSAs) that can help you reduce your taxes and save for your future. We can help you determine whether you’re on target to reach your retirement goals.
We’re here to help you take a fresh look at the health of your tax and financial well-being. We can meet with you to discuss your situation and develop a customized plan.
Find out how to Save Money on 2022 Taxes.
If you have questions, reach out to us at 314-961-1600 or contact us to discuss your situation.
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Alan Dierker is a Tax Manager with experience in tax, outsourced controller services, including fulfilling compilation and preparation agreements, payroll and compliance issues. He also has experience in the following industries: Wholesale Distribution, Private Foundations, Not-for-Profit and Real Estate.
About Smith Patrick CPAs
Smith Patrick CPAs is a boutique, St. Louis-based, CPA firm dedicated to providing personal guidance on taxes, investment advice and financial service to forward-thinking businesses and financially active individuals. For over 30 years, our firm has focused on providing excellent service to business owners and high-net worth families across the country. Investment Advisory Services are offered through Wealth Management, LLC, a Registered Investment Advisor.