3 Last Minute Tax Tips Before Filing Your 2022 Tax Return

Did tax day sneak up on you? Did you procrastinate filing your 2022 tax return? If so, there may be a few things you can do to put yourself in the best position before April 15th. 

Start By Knowing Your Tax Bracket

It’s always wise to know where you fall on the tax spectrum because it may help you decide the best moves for you!

The Internal Revenue Service (IRS) has provided the following tax tables for 2022 (to be used to prepare 2022 tax returns filed in 2023). The numbers might seem high for tax-preparing veterans, but this is in response to higher inflation. 

The IRS has designated the 2022 tax rates depending on your filing status; they are as follows: 

• Individual Taxpayers (filing as single)

• Married Individuals and surviving spouses (filing joint returns) 

• Married Individuals (filing separately)

• Head of household

• Trusts and Estates

You can find additional niche tax rates here.

Let’s dive into some last-minute tips on maximizing your 2022 return.

1. Contribute To Your 2022 Accounts Retroactively

No tinfoil hats are needed. We promise this isn’t an episode of the twilight zone! A unique tax rule allows you to contribute to your 2022 account in 2023. 

This rule allows you to contribute to certain accounts until the April 15th deadline. This includes accounts like IRAs (Individual Retirement Accounts), SEP-IRA (Simplified Employee Pension Individual Retirement Accounts), and HSAs (Health Savings Accounts). And no, we didn’t miss 401ks. Unfortunately, they’re not included in this rule.

There are limits to how much you can contribute to these accounts. But, depending on your age, you might be able to contribute more through what’s called “catch-ups.” 

Let’s take a look at the 2022 contribution limits:

• Traditional IRA 

• • $6,000

  • $7,000 if you’re age 50 or older

• SEP-IRA

• • Employers cannot contribute more than 25% of the employee’s compensation, or $61,000 (please note that catch-up contributions are not permitted in SEP plans)

• HSA
  • If you have a High Deductible Health Plan (HDHP) for just yourself, the limit is $3,650
  • If you have an HDHP for your family, the limit is $7,300
  • If you are age 55 or older, you can contribute an extra $1,000. 
    • For example, if you have single HDHP coverage, the limit extends to $4,650 rather than $3,650.

You might be wondering why this rule is helpful for your 2022 tax return. The simple answer is that you’re lowering your taxable income by contributing money to eligible accounts. And lowering your taxable income leads to a lower tax bill. 

2. Leave No Credit or Deduction Stone Unturned

Tax deductions are there for you to use, so squeezing out all the value you can is essential!

The first step is deciding whether or not you’ll be itemizing or taking the standard deduction. 

Itemized deductions are identifying what you spent on certain deductible expenses. If you itemize deductions, you must list each expense and attach it to your tax return. 

The standard deduction is a set amount the IRS determines based on your filing status (single, married, etc.). You don’t have to list any expenses if you claim the standard deduction. Instead, enter your eligible deduction amount on your tax return.

The 2022 standard deduction amounts are:

Whether or not to itemize deductions depends on your individual circumstances. But if you decide it’s best to itemize, ensure you don’t miss these common deductions!

• State and Local Tax (SALT) costs
• Mortgage Interest
• Student Loan Interest
• Home Equity Line of Credit (HELOC) Interest
• Home Office Expenses
• Medical Expenses over 7.5% of your adjusted gross income (AGI)
• Charitable Donations
• Child and Dependent Care Expenses
• Energy saving home improvement expenses 

And don’t forget about tax credits! Tax credits are a certain amount of money that you can subtract from the income taxes you owe. They are better than deductions because they directly reduce the tax you owe, not just your taxable income. Based on your circumstances, you may qualify for credits regarding dependent children, education, healthcare, etc. 

3. Follow the Rules and Stay Organized

Unless it’s impossible, it’s always best to file your tax return by the deadline. You can file for an extension, but if you owe the IRS money, you can face additional penalties and taxes if not paid by the deadline. 

Tax preparation is complicated enough, don’t make it harder on yourself by being disorganized. If you’re running on crunch time, sifting through a drawer of receipts will only make the process more stressful. 

Do your best to gather and organize everything you need to file your taxes, like social security numbers, W-2s, 1099s, receipts, and more. Your future self will thank you for doing this ahead of time!

And, one more thing! Ensure to (securely) provide a copy of your tax return to your financial advisor!

Pro Tip: Set up direct deposit with the IRS to get your refund faster. 

Create a Complementary Tax Planning and Tax Preparation Strategy

Let’s look ahead to the future! Tax planning is a proactive way to take active steps to reduce your tax liability throughout the tax year. On the contrary, tax preparation (what you’re doing now) is reactive and deals with doing the best you can with the tax decisions you have already made. 

By being proactive, your financial advisor can help you look at your tax liability holistically so you don’t pay more than you need to and keep more of your money working for you and your financial goals. 

If you’re ready to get a head start on proactive tax planning strategies for 2023, please reach out to us today.