5 Last Minute Considerations Before Tax Day
With April’s federal tax filing and payment deadline on the horizon, Americans are dotting their i’s and crossing their t’s as they prepare for the countdown to Tax Day. But before you rush to get that return out the door, are you confident you have everything in order to make your tax filing go as smoothly as possible? Here are five last-minute details to double-check before Tax Day.
Ensure Your Paperwork Is In Order
It is important to ensure that necessary documents (digital online or hard copy) are organized so you can take advantage of all possible deductions.
Max Out Your Advantaged Accounts
Even though the deadline has passed (Dec. 31, 2022) for 401(k) contributions, it is still possible to contribute the max to your Roth IRA or traditional IRA accounts ($6,000 or $7,000 if aged 50 or over) until April 18, 2023. Keep in mind that if you have a Roth IRA, there are contribution limits that take effect based on your income.
The contribution limit for a SEP IRA can’t exceed the lesser of either 25% of the employee’s compensation, or $61,000. [i]
Ensure You Understand The Deductions And Credits That May Benefit You
There are different deduction and credit opportunities out there that could benefit you during tax time, including:
- Earned income tax credit (EITC)
- Charitable contribution deduction
- American Opportunity tax credit
- Child tax credit (CTC)
- State and local property taxes
It may be beneficial to seek the help of an experienced tax professional to learn which deductions and credits could benefit you.
Set Up Direct Deposit
If you haven’t done so yet, consider setting up direct deposit so that if you are eligible for a refund, it will hit your bank account faster.
Consider Consulting a Financial Professional
The world of taxes can be complex, and though there are online tax preparation apps and do-it-yourself tax manuals available, it can be difficult to navigate which benefits might work for you.
It is highly encouraged that in addition to your tax professional, you consult with your financial advisor to discuss your financial situation and goals. Some of the nuances you might encounter could be:
- Getting the most out of any credits or deductions that you are eligible to take. [ii]
- An understanding of future tax projections and their impact on your financial strategy. [iii]
We are here to assist our clients during tax season and are happy to consult with your tax professional. Contact us.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual or any investment product. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by LPL Marketing Solutions
[i] Deadline to max out retirement accounts for 2022 (cnbc.com)
[ii] Credits & Deductions for Individuals | Internal Revenue Service (irs.gov)
[iii] Tax Planning: What It Is, How It Works, Examples (investopedia.com)
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