You only have 6 weeks before the end of the year. Now is the time to make decisions that will help you reduce your tax bill for this year.

Gift Tax

Have kids? Are you trying to transfer money to the kids now instead of waiting until you pass on? That’s great. But if you give them money, the recipient uses the money to make a profit, like interest on savings, or investments, technically that money is taxable to the recipient. The gift tax exemption for 2022 is $16,000. Keep that amount in mind and make sure allocate the amounts each year to avoid complications. The annual exclusion is per recipient; it isn’t the sum total of all your gifts. That means, for example, that you can give $16,000 to your child, another $16,000 to a friend, another $16,000 to a neighbor, and so on all in 2022 without having to file a gift tax return.

If you’re married, you and your spouse may give away up to $16,000 each without needing to file a gift tax return in 2022.

Donations

If you are making donations, make sure you get the checks in the mail before the end of December to make sure that you get the full deduction.

Pay an Extra Mortgage payment

Maybe you could pay January’s mortgage payment before the end of the month in December in order to get the deduction on this year’s taxes.

Sell Stocks

Stocks are down right now. The Nasdaq 100 has dropped nearly 33 percent so far in 2022, the Dow Jones Industrial Average lost more than 20 percent while the world’s best-known cryptocurrency, Bitcoin, lost nearly 60 percent of its value.

Did you lose money? If so, you could sell the stock before the end of the year to take advantage the tax write-off on this year’s taxes. Be careful not to turn around and buy the same stock again within 30 days. That would cause the “wash-sale” rule which would make your write off invalid.

Retirement Fund

Make sure that you try to put the maximum amount in your retirement account for tax savings. Individuals can contribute up to $20,500 to a 401(k), plus $6,500 more if age 50 or up. The 2022 pay in cap for IRAs is $6,000, plus an extra $1,000 if age 50 and older.

If you are a client of PS Tax Solutions, we will keep you on your toes and help you meet your deadlines. PS Tax Solutions provides complete accounting services in Tampa or Lutz.  For more information, go to https://pstaxsolutions.com/ or call (813) 563-8724 for an appointment.