2022 Tax Planning

by Kevin Rigg, Director of Financial Life Planning, Lead Advisor, CFP®, CPA

As 2022 draws to a close, here are some tax planning tips and a reminder of upcoming tax-related deadlines.  

  1. Fourth-quarter tax estimates are due soon. To avoid penalties, be sure to have your payment in the mail no later than January 15, 2023.  

  2. Review your pay stubs. If cash flow allows, make sure to maximize contributions to your tax-qualified accounts before year-end (e.g., 401k, HSA, FSA). 

  3. Consider filling up lower tax brackets. If you expect your tax rate to increase in the future, look for ways to accelerate income that can be taxed at lower rates today. If you have an IRA, a great way to get this done is with a Roth conversion, which must be completed by December 31st. 

  4. Maximize itemized deductions. Consider the timing of state/local tax payments, medical expenses, and/or charitable contributions to bring itemized deductions above the standard deduction ($12,950 for singles and $25,900 for marrieds). 

  5. Harvest losses in your portfolio. A turbulent market like 2022 means larger than usual capital losses in the portfolio. We took the opportunity to “harvest” losses throughout the year and will evaluate taking more before year end. The losses can be used to offset capital gains this year (and future years, if not all used this year). 

  6. Maximize charitable giving tax savings: 

  • Contribute to a Donor-Advised Fund and receive an immediate tax deduction while maintaining the ability to distribute funds to a preferred charity later.  

  • Use a Qualified Charitable Distribution (QCD) to contribute directly to a charity out of an IRA (a QCD is only available to IRA owners over age 70.5). 

  • Donate shares of appreciated securities (stocks, bonds, mutual funds) to receive a tax deduction and avoid capital gains tax. 

At SoundView, we evaluate your personal tax situation and let you know if any tax planning strategies should be considered before year end. We also make every effort to coordinate this planning with your tax preparer, both to get their input prior to implementation and to ensure they have everything needed to file your return accurately in the coming year. 

Your input in this planning process is crucial, so please let us know if there have been any major life changes that might impact your tax situation.