As we begin the tax planning season, here are a few more ideas on how to reduce your tax burden for 2023.
Tax Loss Harvesting
If you have any stocks or Exchange Traded Funds (ETFs) that are losers where you don’t think they’ll meet your investing goals in the future, then let’s take the loss this year rather than next. If we don’t use all of the loss in 2023, it will carry forward on to the next year’s return.
Be careful not to violate the Wash Sale Rules where you sell a stock at a loss and repurchase the same position within 30 days. Those losses aren’t permitted or deductible.
Section 179 Depreciation Rules
The rapid depreciation rules are still in place for this year with the limit being $1,160,000 with a spending cap of $2,800,000. The Section 179 Rules allow us to get a deduction for the full amount of some purchases rather than depreciating them over a standard IRS Mandated useful life.
Let’s be clear. This isn’t me telling you to go spend as much money as you can. The increased deduction only saves the taxation percentages for that year. If you were planning on buying a piece of deductible business equipment anyway, then go shopping, be frugal, do the deal and put it into service prior to the end of the year.
Donations
Any planned donations to a recognized charitable entity should be completed inside this year. This will only help if you’re going to itemize rather than take a standard deduction.
Max Out Retirement Contributions
The rules on these are different depending on the type of plan you have in place, but make sure that any planned contributions are made before their due date.
Estimated Tax Deposits
The estimated tax deposit requirement is anywhere from 90% of this year’s tax to 110% of last year’s tax, depending on your adjusted gross income for 2023. If you haven’t made your deposits, please make them if you are able. Making the payments late won’t not stop them from charging a penalty, but it will reduce it.
Let me leave you with this.
I recently read a rather disturbing article saying that suicides in the US were over 50,000 last year. The suicide rate of 14.3 per 100,000 people hadn’t been that high since 1943.
This deplorable record shows the extreme difficulties we’re having as a nation with people following a pandemic that killed over 1M of our citizens. The difficulties that many felt as a result upended our economy and left many feeling isolated and broken.
As an accountant who does a lot of work for mental health professionals and the mortuary industry, I can tell you that these two professions get very busy near the end of the year with mental health emergencies and suicides. It’s difficult for me to do tax planning with these entrepreneurs because they’re just too busy.
Men over the age of 75 had the highest suicide rate in the last study. Women were found to have suicidal thoughts at a rate four times that of men.
This is my rather long-winded way of saying that if you know someone this holiday season who might be at risk, take a moment and give them a call. Ring their doorbell and bring them some cookies or their favorite beverage.
Let that person know that they aren’t alone in this mixed up, crazy world. Spend some time spreading joy and laughter this holiday. If they don’t have anywhere to go for the holidays, maybe invite them to your home.
I’ve always believed that we reap what we sow in this life. How we treat others is how we will be treated, especially later in life.
The good you do in this world will always come back double.
We’re all going to get through this. Let’s get through it together.
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Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
www.SalarySolutions.net
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