As 2022 comes to an end, it’s important to take a close look at your financial picture and evaluate any adjustments that might be made before the end of the year to potentially lesson your tax burden. Here are a few areas of opportunity to consider.
Maximize Retirement Contributions
When it comes to funding your retirement, people 50 and over are allowed to make pre-tax contributions to a 401(k) of up to $27,000 per year and people under 50 can contribute up to $20,500. As it relates to Individual Retirement Accounts (IRAs), the maximum yearly contribution for people aged 50 and over is $7,000 and the contribution limit is $6,000 for everyone else. Both types of retirement funds support your long-term financial health and provide tax advantages. If you don’t currently have an IRA, there is still time to open an account and contribute your maximum amount before the end of the year.
Take Stock of your Stock Options
Stock options are a valuable perk provided by many companies. However, it’s important to recognize that exercising your stock options does have tax implications. Now is the time to decide if you want to sell the options, knowing that a capital gain or loss will likely occur, and this will affect your tax filing.
Estimate Real and Potential Capital Gains and Losses
Taking the time to estimate your real and potential capital gains and losses is particularly important before the end of the year. Selling securities or other assets before December 31st will allow you to realize the associated capital gain or loss in the 2022 tax year. Your tax professional or financial advisor can help you make the determination as to the benefit of selling before year-end. It’s important to note that capital gains can potentially change your tax bracket.
Evaluate your Health & Flexible Spending Accounts if You Have Them
Be aware that funds in a Health Spending Account (HSA) automatically carry over to the next year. Conversely, when it comes to your Flexible Spending Account (FSA) you’ll forfeit the unused funds as of December 31st, so it is important to check you balance as soon as possible.
You Can Count on Us.
These are just a few of the items that should be evaluated before the end of the year. The team at Brock CPA is here to help you ensure you maximize your financial options. Please reach out with any questions or concerns regarding your accounting and tax needs by calling 904-330-0268 or emailing email@example.com.