Just about two weeks left to go before the year ends. Wow! You’ve probably been meaning to do some 2022 tax planning for months now, but life got in the way. Is it too late? Believe it or not, there’s still time to implement some planning moves that can improve your tax situation for 2022.
Here are four last minute tax tips you can jump on and still enjoy the holidays:
- Make HSA contributions If you are an eligible individual under the health savings account (HSA) rules for December 2022, you are considered eligible for the entire year and can make a full year’s deductible contribution for 2022. The maximum contribution provides a deduction of $3,600 for individual coverage and $7,200 for family coverage. Taxpayers aged 55 or older also get an additional $1,000 catch-up amount.
- Nail down stock losses Consider realizing losses for stock you planned to divest anyway. Those losses can offset gains from other stock or investment asset sales. Losses that exceed gains are deductible up to $3,000 for individuals and married couples filing jointly, or up to $1,500 for married taxpayers filing separately. Any losses above the deduction limit can be carried forward to the next year to offset 2023 capital gains or other income.
- “Bunch” deductible contributions and/or payments of medical expenses Many taxpayers who itemized deductions before the 2017 Jobs and Tax Cut Act no longer benefit from doing so because the standard deduction was increased, and many itemized deductions have been cut back or abolished. A bunching strategy can help you get around these new limits — by accelerating or deferring discretionary medical expenses and/or charitable contributions into the year where they will exceed the standard deduction and do some tax good.
- Use IRAs to make charitable gifts If you are age 70½ or older, own IRAs, and are thinking of making a charitable gift, consider arranging for the gift to be made with a qualified charitable contribution, a direct transfer from the IRA trustee to the charitable organization. The transferred amount, up to $100,000, isn’t included as gross income or a deduction on your tax return. A qualified charitable contribution is a particularly good idea for retired taxpayers who don’t need all their required minimum distribution (RMD) for living expenses.
Yes, it’s late in the year for 2022 tax planning, but not entirely too late. Implementing one or more of these four last minute tax tips can improve your tax situation for 2022. That will make the holidays even merrier, won’t it?