Here we are in November and we're already talking about taxes. For good reason, taxpayers must act now to take advantage of 2022 tax strategies to take now to reduce their tax burden when filing in 2023.
"You want to start maxing out your retirement contributions. You can contribute up to $20,500 and $27,000 if you're 50 and over," says Lisa Greene-Lewis, CPA and TurboTax expert. "And it's a win-win if your employer matches your contribution."
Read the full Q&A below or watch the video above.
Maximize Retirement Contributions
Tracy Byrnes: So while no one wants to be thinking about taxes this time of year, there are some tactical moves you can be making right now that could help reduce your tax bill come April. Lisa Greene-Lewis, CPA and TurboTax expert, is with us right now to help walk us through some.
Lisa Greene-Lewis: Yes, you want to start maxing out your retirement contributions. You can contribute up to $20,500 and $27,000 if you're 50 and over. And it's a win-win if your employer matches your contribution.
Tracy Byrnes: It's amazing. And IRAs, too. There's always an option to contribute to an IRA in many instances.
Lisa Greene-Lewis: Yes, IRA is a great method to lower your taxes. You can contribute up to $6,000 and $7,000 if you're 50 and over. And you can do this up until the tax deadline and still make an impact on your taxes.
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Leverage Health Savings Account (HSA)
Tracy Byrnes: Amazing, right? Same with your HSA, your health savings account. So many people don't realize they could actually use that as a savings tool, not necessarily to pay off medical bills.
Lisa Greene-Lewis: Yes, you can contribute up to $3,650 for your single plan and then up to $7,300 for a family plan. And many people also don't realize that they can do this up until the tax deadline in April of next year and make an impact on their taxes as well.
Don't Miss Out on Savers Credit
Tracy Byrnes: The Savers Credit, I think, confuses a lot of people. But by contributing to a retirement account, you actually could qualify.
Lisa Greene-Lewis: Yes, this is a little-known credit. The IRS states that one out of four people misses this credit. And it's a credit that you get just for investing in your retirement. And it's up to $1,000 if you're single and then $2,000 for married filing jointly.
Tracy Byrnes: So everyone should check out Turbotax's website for more information on that for sure. Another thing no one wants to think about this time of year is the withholdings on their paycheck that comes home, whether it's monthly, weekly, or whatever. But if you owed a lot of money last year or you got a big refund, maybe you want to adjust your withholdings now, right, Lisa? That way you don't get this big check. Why should the government have your money all year long?
Lisa Greene-Lewi: Yes and then just so you don't have any surprises when you do your taxes, so if you made more money this year or you had a big bonus, or weren't where you expected to be when you did your taxes last year. You definitely want to adjust your withholding and you do that by filling out a W-4 form and giving it to your employer or your payroll provider.
Tracy Byrnes: Right or go to HR and ask for some help with that. And to say the market's been volatile is a massive understatement, right? But if you've been buying and selling and creating capital gains and losses, now's the time to check where you are, because then you can kind of work on the rest of the year to offset.
Lisa Greene-Lewis: Right. You do need to check where you are. And if you have any losing stock that you're expecting that just, you know, aren't going to increase, you could possibly sell those and you can offset the losses against your gains. And then you're also able to offset those losses against ordinary income like W-2 income up to $3,000. Another thing you can do is TurboTax, We have a TurboTax Tax Caster, where you can see where you're at with your taxes ahead of time and use that for tax planning. And then also, talked about adjusting your W-4. We have a tool that helps you adjust your withholding.
Tracy Byrnes: The thing is, Lisa, there's so much to remember and know. And if you're not taking notes right now, what should people be doing?
Lisa Greene-Lewis: One thing to remember. You don't need to know these tax rules. You can come to TurboTax and you can fully hand your taxes over to a TurboTax Live expert, they'll do your taxes from start to finish.
Tracy Byrnes: That's good stuff. And again, while no one wants to do it, you could do it on the beach on your phone. And it's something that will help you tremendously come April. And finally, if you've been doing any charitable giving, you got to keep track of your receipts and itemize and things like that.
Lisa Greene-Lewis: Yes, if you've been doing charitable giving and you can itemize your deductions. So, you know, if you're a homeowner, usually homeowners can itemize. You're able to claim charitable contributions, especially for non-cash items. A lot of people clean out their closets at this time, so it's a great time to keep track of that. And TurboTax also has its deductible that helps you value and track your contributions all year long.
Tracy Byrnes: Yeah, or if you have college kids leaving, you get rid of all their stuff and donate it. That's what I did. Lisa Greene-Lewis, thank you for these great tips.
Lisa Greene-Lewis: Thank you.