Nov 30, 2022
7 Year-End Tax Moves to Consider for 2022, #125
The end of 2022 is quickly approaching! This means time is running out to take advantage of money-saving tax breaks. On this episode, I’ll highlight seven year-end tax moves to consider before the ball drops on December 31st. Don’t miss these invaluable tax tips that could make 2022 your best fiscal year yet!
You will want to hear this episode if you are interested in...
- Contribute to a traditional IRA [1:12]
- Contribute to a state-sponsored 529 Plan [3:02]
- Fully fund your Health Savings Account [5:17]
- Take a tax loss on any investments outside of retirement accounts [8:16]
- Consider a Roth conversion [9:10]
- Take advantage of the 401k profit-sharing limit [12:03]
- Write off a business use vehicle [14:13]
Give me a break
Thanksgiving is over. The all-out sprint through the holidays towards the end of the year has begun! Now is the time to start planning your final tax moves for 2022. The first move I’d recommend before the year ends is contributing to a traditional IRA. Especially if you’re self-employed or don't have access to a retirement plan through work. If you have earned income in 2022, you can make a traditional IRA contribution up to $6,000 if you're under 50 and $7,000 if you're over 50. All of this as a pre-tax deduction, of course!
If you don't have earned income for 2022, but you’re married to someone who did, they can make what's known as a spousal IRA contribution. With an adjusted gross income under $204,000, you can make the full $6,000 or $7,000 contribution depending on your age. That contribution amount gets proportionately phased out until your income exceeds $214,000. You also have the potential to make this contribution if you are covered by an employer-sponsored plan through work. As a single filer, if your adjusted gross income is below $68,000, you can make the full contribution, and if you're a joint filer, that adjusted gross income limit is $109,000.
Invest in your health
Another year-end tax tip I highly recommend is fully funding your Health Savings Account (HSA). HSAs have a single and a family plan maximum. The single plan maximum for 2022 is $3,650, and the family plan maximum is $7,300. Additionally, if you're over the age of 55, you can add up to $1,000 as a catch-up contribution. I'm such a big fan of doing this because HSAs are considered a triple tax-free account. You get a tax deduction when the money goes in, and a tax deduction for health-related costs when it comes out. The money also grows tax-deferred!
To really take advantage of this, I would suggest investing the money and leaving it in the account for as long as possible. Be sure to track your health savings account expenses so you can reimburse yourself years after you've made the contributions. The goal is to invest the money in some type of stock-bond portfolio so that it grows in your account. This way you're only actually spending your gains and not the principal. Listen to this episode for more year-end tax moves!