As of January 30, 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 help make your tax day smoother:
1. Take inventory of all your tax-related documents
When it comes to tax preparation, much of the work is locating the records you’ll need to reference when you file. Organize these papers in advance – preferably in a central location – to help the filing process go more smoothly.
The IRS generally requires many of these documents, such as Form W-2 and Forms 1099, to be delivered to taxpayers by Jan. 31 (or February 15 for securities accounts) via mail or electronic means. If you’re itemizing deductions, you’ll also want to track down your personal receipts for deductible expenses ahead of time, such as charitable contributions.
Remember: Wait until you receive all your 2022 tax documents before you file your 2022 tax returns. For example, some more complex investments may be subject to reclassification and amended tax information, or provide Schedules K-1, which often arrive later than Forms 1099. You’ll want to wait until later in the filing season to make sure you have all the documents you need.
2. Consider whether an extension makes sense for your situation
If you’re expecting amended tax documents or foresee a situation where you won’t be able to meet the April 18 deadline, it may make sense to request an extension for your 2022 taxes. Depending on your situation, it may be better to obtain an extension and file the return when it’s final, rather than file an amended tax return with the IRS at a later date. This does not delay your requirement to pay your taxes, however. Those are still due at the normal time.
For 2022 tax returns, the extended due date is Oct. 16, 2023. Contact your tax preparer to help you make this decision.
3. Reduce your taxable income for 2022 with an HSA contribution
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.
2022 HSA contribution limits
|55+ catch-up contribution
4. Meet your IRA contribution limit for the year
IRA contributions made between Jan. 1 and Apr. 18, 2023, can be designated for either 2022 or 2023. If you haven’t met your contribution limit for 2022, consider contributing to your traditional or Roth IRA by the April deadline. (You can do so in a lump sum if you’d like.) The maximum total annual contribution for Traditional and Roth IRAs for 2022 is $6,000, or $7,000 if you are 50 or older.
- Traditional IRA: Your contributions during this four-month window may be eligible to be deducted from your 2022 taxes, depending on your income level and whether you (or your spouse) are covered by a retirement plan at work.
- Roth IRA: Your contributions won’t be tax deductible on your 2022 tax bill, but they can help you reach your retirement goals. Roth IRA contributions are subject to income limits.
5. Think ahead to next tax season
It may seem early to start strategizing for 2023 taxes. But the sooner you start, the more flexibility you’ll have to pursue tax strategies that could benefit you.
As you prepare your 2022 taxes, here are a few considerations to keep in mind for 2023:
- Withholding status: Is your employer withholding too much, or too little, tax from your paycheck? If so, it may make sense to alter your withholding amounts for 2023 the earlier, the better.
- Itemize or take the standard deduction for 2023? If 2023 is shaping up to be a year where itemizing could work, consider how you can take early steps to maximize the tax benefit. For example, you could increase your charitable giving – just make sure to save all receipts for donations if you decide to itemize.
- Tax credits: Are there any new credits you can qualify for 2023? Specifically, the Inflation Reduction Act offers tax credits for taxpayers who purchase an electric vehicle or make certain energy improvements to their homes.
We’re here to help with your year-round tax planning needs
Smart tax strategies can help you keep more of your money and optimize how much you save for financial goals. We can work with you and your tax professional throughout the year to identify tax-saving opportunities that may benefit you.