Take the RMD, or “Required Minimum Distribution”, from Your IRA If Necessary
- If you turned 72 in 2022, the deadline for taking a required minimum distribution from your IRA is April 3, 2023. Subsequent RMDs must be taken by December 31st. There are significant penalties if the RMD is not taken on time.
Review Charitable Gifting Options, Ensuring That End-of-year Deadlines Are Met
Charitable giving not only supports a good cause, but it can also have tax advantages. Be sure to consult with your tax professional and note that most custodians have mid-December deadlines.
- Donation of appreciated stock: should you have stock that has gone up in value significantly and wish to give to a charity, a potential strategy is to gift appreciated security rather than simply cutting a check.
- Qualified Charitable Distribution (QCD): if you are required to take a RMD from your IRA, it can increase overall taxable income and your tax obligation. In some cases, the RMD can shift you into a higher tax bracket. A Qualified Charitable Distribution, or QCD, is a direct contribution from your IRA to a charity and can offset some or all of your RMD. Note that the maximum contribution is $100,000 and a deduction is not allowed, but you won’t have to include the amount of the QCD in your taxable income.
Other Types of Gifting
- Gift tax exemptions: Should you wish to make cash gifts; the 2022 annual federal gift tax exclusion is $16,000 each without counting against the 2022 $12.06mm individual lifetime exemption ($24.12mm for married couples).
- 529 contributions: for Colorado taxpayers, contributions to CollegeInvest savings accounts are eligible for a Colorado state income tax deduction (refer to collegeinvest.org). Note that there are restrictions.
Taxes
- Deadlines:
- Due date for 2022 individual tax returns is April 18, 2023
- Due date for 2022 business tax returns (Partnerships, multi-member LLCs, S-Corps) is March 15, 2023, (C-Corps, sole propriet0erships, single-member LLCs) is April 18, 2023
- Last day to make 2022 contributions to Roth and traditional IRAs is April 18, 2023
- Estimated payment dates for 2023: January 17, 2023 for Q4 2022, April 18, 2023 for Q1 2023, June 15, 2023 for Q2 2023, and September 15, 2023 for Q3 2023.
- Deadline to file extended individual 2022 tax returns: October 16, 2023
- Review and adjust withholdings and payments: major events or life transitions, including marriage, divorce, having a child or death, can impact withholdings
- Tax loss harvesting: while we never recommend that taxes dictate investment strategy, in some cases tax loss harvesting, or selling securities for less than their cost basis to offset other realized capital gains, can make sense. There are restrictions around tax loss harvesting and should be done in consultation with your tax professional.
Review Employee Benefits
- Retirement plans: Ensure that your company-sponsored retirement plan contributions are maxed out and that the plan is invested in line with your financial goals. The 2022 maximum 401(k) contribution is $20,500, and if you’re over 50 an additional $6,500 “catch-up” contribution is possible. For IRAs, the maximum contribution is $6,000, with an additional $1,000 “catch-up” if you’re over 50. Note that while year-end is a good time to review your plan, the actual deadline for contributions is tax day of the following year, in this case April 18, 2023.
- Compensation and other benefits: Review your compensation, including any incentive plans. As well, review and adjust your additional corporate benefits including health insurance, life insurance, disability insurance and FSA, as needed. Check deadlines with your FSA; you may have a grace period after 12/31/22 to use any funds contributed in 2022, after which you would forfeit the ability to roll the funds over. Review your HSA as well. The maximum HSA contribution in 2022 for individuals is $3,650, $7,300 for families and an additional catch-up contribution of $1,000 possible if the individual is over 55, and the deadline for HSA contributions for 2022 is April 18, 2023.
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This publication is for informational purposes only and is not intended as tax, accounting or legal advice, or as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering.