YOUR TAX PLANNING CHECKLIST FOR YEAR END 2022 AND THE NEW YEAR 2023
Out-right gifts to charity of appreciated stock Receive an upfront tax deduction equal to Market Value of the stock . This is subject to a 30 % AGI limitation , with a five-year carry-forward of any unused deduction .
Contribute appreciated stock to a Donor Advised Fund Receive an upfront tax deduction equal to Market Value of the stock . Subject to 30 % AGI limitation , with 5- year carry-forward of any unused deduction .
Transfer appreciated stock to a Charitable Remainder Trust Realize gains within the Trust on a tax-free basis . The gross value of transferred assets can be sold and reinvested in a diversified portfolio without up-front capital gains . The diversified portfolio creates an annuity stream for up to 20 years , or for the life of the donor . Remainder interest goes to charity at end of Trust term and attracts a partial up-front income tax deduction . AGI limits apply to the tax deduction , any unused deduction can be carried forward 5 years .
Medical Expenses
With rising costs of health care , higher premiums and deductibles , it ’ s important to understand ways to reduce the financial impact through these deductions and tax-beneficial accounts .
1 . Deduct all possible medical costs and use a Health Savings Account Most medical costs often fail to be deducted because of the 7.5 % AGI hurdle that applies under Schedule A – Itemized Deductions . Consider a Health Savings Account ( HSA ), contributions to which are tax deductible , above the line , as an adjustment to income . HSAs can only be used in conjunction with a High Deductible Health Plan .
2 . Medical expenses of a Dependent Such expenses may be deducted on Schedule A , including Long-Term Care ( LTC ) expenses of a Dependent if they are not capable of self-care . A Dependent is someone that you can claim on your tax return because you pay for more than half of their living expenses .
3 . Deduct Long-Term Care ( LTC ) Insurance The LTC premium deduction is up to $ 5,640 in 2022 if over 70 years old . For 2023 , the maximum deduction is $ 5,960 if over 70 . Amounts received under the contract ( other than dividends ) are excluded in most cases from taxable income when used to fund care ( note : employer paid contracts are taxable ). Payments received do not count towards income for Medicare premium purposes .
4 . Use Achieving a Better Life Experience ( ABLE or Disability ) accounts With a $ 15,000 annual contribution limit and $ 12,490 from the beneficiary , these accounts grow tax-free . Up to $ 100,000 value in the account won ’ t be considered for Supplement Security Income or Medicaid . Distributions are tax-free if used for a qualifying purpose , which is interpreted widely .