YOUR TAX PLANNING CHECKLIST FOR YEAR END 2022 AND THE NEW YEAR 2023
Here are a few additional considerations to help with your 2022 / 2023 retirement account tax planning :
Traditional IRA contributions may be fully deductible Where the taxpayer or the taxpayer ’ s spouse are covered by a qualified plan with an employer , the deductibility of the contribution may be limited or lost entirely . The deduction for the contribution starts to be limited at modest income levels ($ 68,000 for 2022 if single , $ 109,000 if MFJ ; $ 73,000 for 2023 if single , $ 116,000 if MFJ ). In such situations , consider the Backdoor Roth conversion strategy in number 4 above . Where neither of the spouses are covered by a plan at work , contributions can be made on a fully deductible basis , regardless of income .
Married taxpayers each can contribute to their own IRA For those filing joint returns , there is no earned income requirement for IRA contributions made by a nonworking spouse if the earned income of the couple exceeds the combined IRA contribution amount . Such contributions are also subject to the income limits when assessing their deductibility .
From 2020 onwards , the age limit on IRA contributions is removed
Charitable Contributions
Charitable contributions are important to many of us as a way to support causes that we care about as well as create a living legacy . Tax benefits can provide an extra incentive for us to do so — you ’ ll want to be sure to take advantage of these to realize the maximum benefit . Here are four approaches to consider :
1 . Contribute highly appreciated assets ( stocks ) Contribute to charity to avoid paying capital gains and receive tax deductions . Such contributions also remove assets from the taxable estate .
The tax deduction will be equal to Market Value of the stocks , even if there is very low , or no , tax basis . The tax deduction may be limited to 30 % of adjusted gross income ( AGI ); however , any unused deduction in the year may be carried forward for five years .
2 . Contribute cash to a public charity For 2022 and 2023 , up to 60 % of AGI can be deducted if paid in cash to a public charity .
3 . Make use of Qualified Charitable Distributions ( QCDs ) Due to the large Standard Deduction ($ 28,700 for MFJ 2022 and $ 30,700 for MFJ 2023 ) if both spouses are over 65 years old , charitable donations claimed as itemized deductions are often not tax-effective .
In these circumstances , it is more beneficial to make a yearly QCD from your IRA to a public charity if you are over 70.5 years old . Such QCDs count towards meeting your RMDs for the year and transfer highly taxed ordinary income to the charity without creating taxable income for you . There is a limit of $ 100,000 per year for a QCD .