Financial Planning Income Tax Season

Although calendar year 2022 is in the books, there are still things that you can do before the income tax filing deadline of April 15th that can have a positive effect on your final 2022 tax liability.

Begin by compiling all your tax deductions related to your W-2 and/or business income.
If your itemized deductions come close to your standard deduction, make sure to check
your overall federal and state tax liability both ways since the state standard deductions have a much lower threshold than federal. Also, provided you have earned income for the year, you still have time to fund an IRA account with up to $7,000. If you don’t have access to a retirement plan through your employer, you will most likely want to utilize a Traditional IRA for its tax deductibility feature. If you do have a retirement plan through work, you will most likely want to opt for a Roth IRA since the contribution will not be deductible. If you had a Health Savings Account (HSA) tied to your health insurance coverage and haven’t fully funded the account up to the maximum level, you can still make a tax-deductible contribution prior to the filing deadline. If you had self-employment or 1099 income for 2022, you also have an opportunity to fund a Simplified Employee Pension(SEP)-IRA for yourself with up to 20% of this net income and then deduct the contribution from your taxable income.

Get started early this year with your tax preparation and make sure to take advantage of all the available options. You could lower your final “tab” and set yourself up for a better future at the same time.

by Mark S. Reagan – Financial Advisor