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Mid-Year Tax Planning Considerations

Mid-Year Tax Planning Considerations

| July 14, 2022

It is hard to believe we are already more than halfway through 2022.  Following are a few mid-year tax planning considerations:

  1. Review your tax withholdings, and work with your tax professional to review your projected tax liability for the year relative to what you have paid, if you are on track to over-pay Uncle Sam, you could give yourself a raise for the remainder of the year by reducing your withholdings.
  2. Review your retirement plan contributions:  Cash flow permitting, review if you have room to increase your contributions to max fund your retirement plan for the year.  Alternatively, make sure you have not overfunded any retirement plans.
  3. If you have been actively doing Roth Conversions, review your Roth Conversion budget, keeping in mind that Roth Conversions are “on sale” right now due to the recent drop in the market.
  4. Check on health care and dependent care flex spending accounts to ensure you are tracked to use the funds that you have put away.
  5. If you turn 72 this tax year (2022), you will need to begin taking required minimum distributions (RMD).  While your first RMD is technically not due until April 1 the following tax year (2023), if you delay you will need to satisfy your RMD for the 2022 and the 2023 tax years in 2023 and this might be a tax surprise for some.
  6. If you are 72 and over and have not yet satisfied your required minimum distribution for the year and have charitable intent, evaluate if a qualified charitable distribution makes sense for you. 

"The best way to teach your kids about taxes is to eat 30% of their ice cream" - Warren Buffet