Year-End Tax Planning for 2022 for Individuals
Posted on November 29, 2022 by Oozle Media
It is important that, as the end of the year approaches, individual taxpayers review their year and get ready for next year’s tax return. Here are a few items that you should consider:
- Check tax withholding on your paycheck: W-2 employees should review their current pay stub and confirm that you are withholding enough Federal and State taxes. Compare your income and tax withholdings on the IRS tax table found here.
- Make a Charitable Donation: The standard deduction for a Married Filing Joint return is $25,900($12,950 for Single Filers). If you itemize or are close to itemizing, charitable donations are a great way to get a deduction. It is also important to remember, just because you don’t have enough itemized deductions to meet the federal level, doesn’t mean you won’t meet your state’s threshold to itemize.
- Max your retirement contribution: Contributing the maximum amount to your employer-sponsored retirement plan can help lower your taxable income. In 2022, the maximum contribution for 401(k)s and other similar plans is $20,500 ($27,000 if you are age 50 or older).
- Review investment accounts for YTD capital gains and loss and dividends: Recent market activity may have created some unrealized losses in your investments. Examine your portfolio and consider selling off these losses to offset any capital gains that you may have.
- College Savings Plan Contributions: College Savings Plans, also known as 529 Plans, offer various benefits including tax free earnings and a potential deduction from your state tax return (not all states participate). Contributing is a great way to plan for the future and receive a state deduction as well.
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