6.11.2023 I Taxes Are On Sale

Your Money Radio

Today’s show focuses on what you can do between now and the end of 2025 to lessen the impact of taxes on your tax returns.

Taxes are “On Sale.” What Does This Mean and How You Can Benefit?

• Tax rates were reduced as part of the Tax Cuts and Jobs Act of 2017.
• The federal tax a couple making $350,000 will pay in 2023 is roughly $70,000
• This amount will increase to $90,000 unless Congress extends the tax laws.

2023 is an excellent time to begin to implement a good tax management plan that might include:

• Increase your income--use up your lower tax brackets

- Last October — The IRS announced changes to tax brackets, 401(k) plan contribution limits, estate, and gift tax thresholds, and Social Security payouts.

• Decrease your income--offset your higher tax brackets

- Max out your qualified retirement accounts [401(k)/403(b)] — there are only so many paychecks left in 2023!

- Make sure you claim business deductions, especially for pass-through entities in high-state income-tax states. But be sure to check with your accountant.

Be Proactive

• Mid-year is a great time to calculate whether you are over or under-withholding taxes.
• If you’re retired and taking distributions from your retirement accounts
• You may want to consider a one-time “tax withholding distribution” from a traditional IRA or other retirement accounts (not a Roth IRA)

Other strategies for qualified accounts

• Take distributions from a tax-deferred account such as a 401(k) plan or Traditional IRA sooner than you need it, and pay ordinary income taxes at your lower current rate