By Jeffrey R. Wolfe, Senior Vice President and Manager, Wealth Planning Strategies
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It’s the last day of tax season 2022. Whether you’re done with your taxes, or if you’re rushing to the mailbox to file today that doesn’t mean you need to forget about your tax situation going forward. Take what you’ve learned from this year and use the rest of 2023 to plan for your filing next year. Consider reviewing your strategies to make sure your tax situation is in its best shape. Given the continuing market volatility consult with your tax professional regarding any other modifications to your tax planning you may need to consider such as:
- Consider whether to take certain gains or losses in this taxable year. Choosing the appropriate time to take such actions can help control your potential tax liabilities.
- Look at fully funding employer-sponsored plans and/or tax-deductible IRAs. Maximizing these contributions may lower your tax bracket. Small business owners with no existing employer-sponsored retirement plan should consider establishing one and taking advantage of generous tax credits introduced by recent legislation to help small business owners with some of the startup cost for retirement programs.
- Review Roth retirement planning options, especially in this volatile market. Converting existing pre-tax assets to a Roth IRA, funding a Roth IRA, or making Roth salary deferral contributions through your 401(k), 403(b), or 457(b) plan now may provide more after-tax cash flow during retirement. Recall, though, once you make a Roth conversion, it cannot be undone.
- Consider tax-advantaged annuities or QLACs to provide lifetime income guarantees.
- Think about the location of your assets. Perhaps mutual fund investments are more pragmatic in a tax deferred account than a taxable account for your situation.
- For higher income earners, review your withholdings and your passive investments and make sure you address any potential Affordable Care Act Taxes or the cap on your state and local tax deductions.
Taxes are one of the two guaranteed things in life, so you must continue to deal with them.
Stay diligent and review your situation with your tax advisor and your financial advisor throughout the year to put together a plan that is right for you.
Benjamin F. Edwards does not provide legal or tax advice, therefore it is also important to consult with your legal and tax professionals for additional guidance tailored to your specific situation.