By Jeffrey Meenes, CFP® (Published Date November 23, 2022)
What has changed for you in 2022?
If notable changes took place in your personal or professional life, then you may want to review your finances before this year ends and 2023 begins. For some, this year has been as complicated as learning a new dance. Did you start a new job or leave a job behind? Did you retire? Small end-of-year moves in 2022 might put you in a better position in 2023.
Even if your 2022 has been relatively uneventful, the end of the year is still an excellent time to get cracking and see how you can better manage your overall personal finances.
Keep in mind that this article is for informational purposes only and is not a replacement for real-life advice. Please consult your tax, legal and financial professionals before modifying your financial planning strategy.
Do you engage in tax-loss harvesting?
That’s the practice of taking capital losses (selling securities for less than what you first paid for them) to manage capital gains. You might want to consider this move, but it should be made with the guidance of a financial professional you trust.1
You could even take it a step further. Consider that up to $3,000 of capital losses in excess of capital gains can be deducted from ordinary income, and any remaining capital losses above that amount can be carried forward to offset capital gains in upcoming years.1
Do you want to itemize deductions?
You may want to take the standard deduction for the 2022 tax year, which has risen to $12,950 for single filers and $25,900 for joint. If you think it might be better for you to itemize, now would be a good time to gather the receipts and assorted paperwork.2
Are you thinking of gifting?
How about donating to a qualified charity or non-profit organization before 2022 ends? Your gift may qualify as a tax deduction. For some gifts, you may be required to itemize deductions using Schedule A.3
While we’re on the topic of year-end moves, why not take a moment to review a portion of your estate strategy? Specifically, take a look at your beneficiary designations. If you haven’t reviewed these designations for some time, double-check to see that these assets are structured to go where you want them to go in the event that you pass away. Lastly, look at your will to make sure it is still valid and up-to-date.
Check on the amount you have withheld. If you discover that you have withheld too little on your W-4 form so far, you may need to adjust this withholding before the year ends to ensure that next year is on track.
What else can you do before 2022 comes to a close?
Are you considering a Roth conversion? The end of the year is the deadline for completing a Roth conversion for the 2022 tax year.
Money left in your FSA may be lost if not used by year-end. Some employers allow a portion of the amount saved to be rolled over for the next year. But in general, savers must spend their FSA funds before the end of the year or else the money is lost.
Make sure you've contributed to tax-advantaged accounts if your still employed. If you're also saving for education, keep year-end requirements in mind too. Some states' 529 plan accounts have current year deadlines in order to get state tax breaks.
Remember RMDs if you are 72 or older. Note that if you delay your first RMD until April, you'll have to take 2 RMDs your first year—and pay taxes on them. The first will still have to be taken by April 1; the second, by December 31.
You might be eager to say goodbye to the old year and welcome 2023. Before you celebrate, though, consider speaking with a financial or tax professional. Sooner is better. Small end-of-year moves might help you improve your short-term and long-term financial situation.
This content is developed from sources believed to be providing accurate information, and provided by Meenes Wealth Partners. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.