As of Jan. 12, 2023
The 2022 tax season is here. As you prepare to file your individual income tax returns ahead of the April 18, 2023, federal deadline, here are a few actions to consider:
1. Be aware of the standard deduction amount this year — so you can choose the tax filing strategy that saves you more money
Remember: Itemized deductions are only useful if they exceed the standard deduction amounts, which increased for 2022:
- $12,950 for single filers (up $400)
- $25,900 for married filing jointly (up $800)
If your deductions are close to these amounts, evaluate your options. For example, does it make sense to increase your charitable giving before the year’s end to take advantage of the increased savings you may realize from taking the itemized deduction over the standard deduction?
Deadline to complete this move: Begin to weigh your options in the final months of 2022 so you have time to complete any moves that can benefit you by the end of the year.
2. Contribute to an IRA
Consider contributing to your traditional or Roth IRA — you can do so in a lump sum if you’d like. Filers have until April 18, 2023, to make an IRA contribution that counts toward the 2022 tax year. The maximum total annual contribution across all IRAs for 2022 is $6,000, or $7,000 if you are 50 or older.
- Traditional IRA: Contributions may be tax deductible, depending on your income level and whether you are covered by a retirement plan at work.
- Roth IRA: Depending on your income level, you may be eligible to contribute to a Roth. Roth IRAs are funded with after-tax dollars, but distributions are tax free in retirement if certain conditions are met.
3. Contribute to your health savings account
If you’re in a high-deductible health plan, you might qualify for a health savings account (HSA). Your contributions are pre-tax, which reduces your taxable income. The HSA contribution deadline for the 2022 tax year is April 18, 2023. Annual contribution amounts are:
- $3,650 individual coverage (up $50)
- $7,300 family coverage (up $100)
- Individuals ages 55 and older can make an additional $1,000 catch-up contribution.
We can help with your tax planning needs
The beginning of the year is a great time to connect with us on tax planning and review your financial goals. We can evaluate your financial situation with your tax professional and discuss how you may be able to take advantage of these and other tax-saving opportunities.