Year-End Tax Moves
Before you know it, December 31st will be here. And that means there are only a few weeks left to lower your tax liabilities!
Successful tax strategy favors the early movers who take swift action. Especially with the Build Back Better Act potentially going into law in 2022, you want to be prepared in advance.
Having your tax and business plans settled on a solid foundation going into 2022 will not only give you peace of mind. Your plans may help you take advantage of extra opportunities to keep more of your hard-won earnings. Don’t drive yourself crazy waiting until the last minute to get organized. Whether you’re estate planning, considering retirement options, weighing the impact of new tax laws, or wondering what’s next for your business, I can steer you to the best possible outcome.
So what are some year-end tax moves for the savvy business owner or investor?
According to resources like Kiplinger’s these three tax moves can be game-changers for you in the spring:
#1: Max out tax-deferred retirement savings plans
The limits for contributions to a 401(k) or other employer-based retirement plan for 2021 is $19,500, and is planned to increase to $20,500 in 2022. If you are over 50 you can also make “catch-up” contributions of an additional $6,500!
Contributing the maximum is a smart move if you plan to convert a traditional IRA to a Roth IRA since it lowers your taxable income. IRA contribution limits in 2021 are $6,000; those over 50 can stash away $7,000.
This tactic has the dual advantage of putting your money to work for you, while also lowering your tax liabilities.
#2: Make chairtable gifts before 2021 ends
End-of-year giving is another important way for you to lower your taxes for April of 2022. Like contributing to a retirement plan, it also comes with a double benefit; you can give towards causes that you are passionate about, and pursue change in the world around you.
If you plan to make tax-savvy gifts you will want to do so within the next couple of weeks!
Review your estate plan with your lawyer to see if gifting makes sense for you this year.
#3: Postpone RMDs as long as possible
Experts often recommend you wait until mid-December to take your required minimum distributions (RMDs) from your IRAs. Delaying RMDs not only lets your money continue to grow, but postpones your tax liabilities.
“There’s no time like the present to get up to speed on the RMD rules. Once you know the basic rules, you can use smart strategies to minimize taxable distributions and make the most of the money that you must withdraw.” (Kiplinger)
While delaying your RMDs isn’t always an option, there are also a handful of exceptions that can be made for business-owners that you be able to take advantage of.
Consult Your Lawyer and Accountant
If you’d like to learn more about retirement planning, business planning, and tax law, call our office today to schedule a time for us to sit down and talk.
I can guide you through the most tax-savvy and business-wise options available to you!
To reach our office call (212) 548-487, or reach us online at our Contact page.
