What has changed for you in 2022?
For some folks, 2022 has been as complicated as learning a new dance. Did you start a new job or leave your old job behind? That’s one step. Did you get to retire? There’s another step. If any notable changes took place in your personal or professional life, then you may want to review your finances before 2023 begins. Ensuring you have all the right moves in 2022 might put you in a better position to tango with 2023.
Even if this year has been relatively uneventful, the end of the year is still a great time to get cracking and see where you can manage your overall personal finances.
Please keep in mind that this article is for informational purposes only and is not a replacement for real-life advice from a qualified professional. Please consult your tax, legal, and accounting professionals before modifying your tax strategy.
Do you engage in tax-loss harvesting?
That’s the practice of taking capital losses (selling securities for less than what you initially paid for them) to manage capital gains. You might want to consider this move, but it should be made with the guidance of a trusted financial professional.1
In fact, 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 being gathering the receipts and assorted paperwork.2
Are you thinking of gifting?
What 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 of your passing. Lastly, look at your will to make sure it is still valid and up-to-date.
Additionally, check on the amount you have withheld from your paychecks. 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.
What can you do before ringing in the New Year?
New Year’s Eve may put you in a dancing mood, eager to say goodbye to the old year and welcome 2023. Before you put on your dancing shoes, though, consider speaking with a financial or tax professional. Do it now, rather than in February or March. Small end-of-year moves might help you improve your short-term and long-term financial situation.