10 Important Tax Planning Deadlines You May Need to Know About

by Matt Roberts, MFM, CFP®, CAP®, Planning Officer | November 17, 2022

It’s that time of year again! It’s time to ensure you are maximizing all the tax planning strategies that may exist based on your personal situation. There is still time to take advantage of charitable giving strategies, managing investment income, or contributing to tax-advantaged investment accounts.

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For clients of Syverson Strege, we have likely discussed these strategies as part of the financial planning process. If you’re not a client of Syverson Strege, it’s important that you sit down with a financial planner and tax preparer to ensure you’re not missing out on any opportunities that, in many cases, won’t exist if you wait until January 1.

Disclaimer: The information in this article does not constitute tax advice. Please contact your tax preparer before acting based on information written in this article.

Items to Handle Before December 31

  • Gifts to charity must be made before the end of the year. This includes gifts of cash, securities, and personal property. In addition, Qualified Charitable Distributions (QCDs) will need to be made by the end of the year to provide benefit in 2022. 

    Please note that in order for a QCD to offset Required Minimum Distributions (RMDs), the check must be deposited by the charity in 2022.
  • Roth conversions could be beneficial if you are in a low tax bracket and anticipate your income going up in the future. Conversions from a Traditional IRA to a Roth IRA must be completed before year end to recognize the income at this year’s tax rate.
  • It’s no surprise. The markets have not been kind to investors in 2022. This is a good opportunity to make “lemonade out of lemons” by reviewing your portfolio to consider a tax-loss harvesting. This is the process of selling positions with a loss, replacing the position with a like-kind holding, and then buying back the original holding after 30 days. By tax-loss harvesting, you recognize the tax loss, but the real loss in the investment is avoided since you remained invested in a similar position. You can use $3,000 of the loss to offset ordinary income. Losses above $3,000 can offset capital gains and can be carried forward indefinitely to offset income in future years. This process is being done on your behalf if you’re a client of Syverson Strege.
  • If you have access to an employer-sponsored retirement plan such as a 401(k) or 403(b), you could consider maximizing the contributions you put into the plan. In 2023, the maximum contribution will increase to $22,500. The maximum employee contribution for a 401(k) and 403(b) is $20,500. An additional contribution of $6,500 can be made for those 50 or older. Unlike IRA contributions, these contributions need to be made before year end to qualify for 2022.

Items That Could be Handled Before April 15

  • Traditional and Roth IRA contributions can be made up until you file your taxes or April 15. The maximum contribution is $6,000 with an additional $1,000 catch-up contribution for those 50 or older.
  • Health Savings Account (HSA) contributions may also be made up until you file your taxes or April 15. The maximum contribution to an HSA for an individual is $3,650 or $7,300 for a family. There is a $1,000 catch-up if you are 55 or older.
  • As a parent or grandparent, you may have established a 529 Plan to help save for college. Each state has their own rules regarding the deductibility of contributions that can offset state income taxes. You can see your state rules by clicking here. In Iowa, you can deduct a contribution of $3,522 per beneficiary. For example, in the case of parents, each parent can take a $3,522 deduction for each child. The contribution can be made up until you file your state income tax return or April 30.

Iowa State Tax Update

Iowa passed legislation on March 1, 2022 that will overhaul the tax system beginning in 2023. It will fully be phased in by 2026. Here are some of the highlights:

  • The top tax bracket will be reduced to 6% in 2023 and will gradually reduce to a tax rate of 3.9% by 2026. Please note that state income tax deduction for Federal taxes paid will go away in 2023.
  • Beginning in 2023, Iowans 55 and older are exempt from state taxes on retirement income. This includes distributions from IRAs, pensions, and annuities. Please note that Iowa already does not tax Social Security, so many retirees will not be subject to Iowa income tax.
  • Similar to the exemption on retirement income, farmers who are 55 and older can elect to be exempt from state taxation on farm rent/crop share income (provided they farmed for at least 10 years) or exclude the capital gain on the sale of the farmland.

Deadlines

As a client of Syverson Strege, here are some specific deadlines for the 2022 tax year that may apply to your financial situation.

12/2/22: Final date to submit request for Roth conversions. 

12/5/22: Final date to submit requests to fund charitable gifts with mutual funds. 

12/15/22: Make sure all checks for Qualified Charitable Distributions (QCDs) from IRAs have been cashed (the charity needs to cash the check to qualify as a QCD for 2022). 

12/16/22: Final date to submit requests to fund charitable gifts with stocks. 

12/27/22: Final date to submit requests to fund charitable gifts if both accounts are held at TD Ameritrade. 

12/29/22: Final date to request distributions for investment accounts to ensure the funds go out by December 31.  

12/30/22: The sale of stocks, bonds, ETFs, or mutual funds must be made for the capital gain or loss to count toward 2022 income.

12/31/22: Checks to charity must be postmarked to qualify for a 2022 tax deduction. 

12/31/22: Final date to make employee contributions to 401(k)s and 403(b)s. 

04/15/23: Last day to contribute to Traditional or Roth IRAs for 2022.

If you need a financial planner for advice on year-end deadlines or your financial planning, call Syverson Strege at 515-225-6000 to schedule a complimentary, no-obligation, private consultation.