Last-minute tax saving opportunities

from Wharton Wealth Planning|

Even though 2022 is over there are still a few ways to reduce your 2022 tax liability.
You can contribute to or open up an IRA or Roth IRA (Backdoor Roth also) for 2022 through April 18, 2023. For the 2022 tax year, the maximum contribution is $6,000 for people under 50 years old and $7,000 for those 50 and over.

If you have a flexible spending account (FSA), you can access that money until March 15 and roll over up to 20% of last year’s contributions into the current year. Additionally, the FSA contribution limit increased to $3,050 for 2023.

There were a lot of tax changes in 2022. Several tax breaks that were allowed on your 2021 tax return are no longer available, like the increased child tax credit, which is back down to $2,000 per dependent after being $3,600 per dependent in 2021.

There are also some changes and expansions. For example, the residential clean energy credit also increased, which means more electric cars are eligible for a tax credit this year.

Know that if you owe the IRS tax money for 2022, an extension only gives you more time to file, not more time to pay. You’ll want to pay your full estimated tax bill by April 18 to avoid penalties (taxes aren’t due until May 15 for residents in parts of California impacted by recent storms).

David B. Rosenstrock, CFP®

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