Smart Tax Moves to Consider Before 2023 Concludes
As the year draws to a close, it’s crucial to remember that while it’s the season of giving, you don’t want to give more to the IRS than necessary. Financial experts emphasize that strategic decisions made in these final days of 2023 could lead to significant savings on your taxes, potentially making your 2024 a little brighter and less financially strained.
Casey Broad, a Certified Financial Planner with DACA Financial Group, advises, “It’s always better to pay yourself than the tax agencies. I believe that’s a sentiment many would share.” One effective strategy Broad suggests is maximizing contributions to your 401(k) and Health Savings Account (HSA) if you have one more pay period left this year. These contributions can substantially lower your taxable income.
For those with upcoming medical expenses, such as dental work or orthodontics for a child, Broad recommends planning ahead. “By paying for these expenses now, you can benefit from the current year’s tax deduction,” he explains. This foresight can lead to considerable tax savings.
Gig workers, such as those in rideshare or food delivery services, should start organizing their financial records immediately. Broad points out, “For gig workers, expenses like cell phone bills, data plans, mileage, and vehicle maintenance are crucial for tax calculations.” Keeping a meticulous record of these expenses is vital for maximizing deductions.
2023 didn’t see significant government advance programs like the previous year’s child tax credits, reducing the likelihood of unexpected tax liabilities. In fact, due to inflation adjustments, tax brackets have widened, potentially placing you in a lower tax bracket. Additionally, the standard deduction has increased to $29,200 for married couples filing jointly and $14,600 for single taxpayers. Broad notes that for many, opting for the standard deduction might be more beneficial than itemizing, given the current tax code.
However, Broad emphasizes that tax situations are highly individualized. What works for one person may not be suitable for another. His universal advice is to start organizing your tax documents and formulating a plan as soon as possible. “Creating checklists and organizing documents can significantly streamline the tax preparation process,” he advises. This organized approach can help ensure that you make the most informed and beneficial tax decisions as the year concludes.
