5 Things to Do Before Filing Your Taxes

With the income tax deadline looming on April 18, now is the time to start planning for your 2022 tax return. But before you sign that return, consider these five tips which could save you money.

Open or contribute to an IRA. If you don’t already have an Individual Retirement Account, consider opening one now. Or if you do, remember that contributions made before April 18 can count toward your 2022 income tax return. Up to certain limits, contributions are tax deductible, and some people might even be able to drop down a tax bracket.

Check on your flexible spending account rules. While many flexible spending accounts impose a “use it or lose it” rule by December 31 each year, some allow a grace period extending into the next year. Check with your fund manager to be sure you haven’t left money on the table.

Contribute to a health savings account. Funds are contributed to an HSA on a before-tax basis, essentially lowering your taxable income for the year. Plus, your HSA will help you manage healthcare expenses if you’re enrolled in a high-deductible, low-premium healthcare plan. Contributions made to an HSA by April 18 can count toward the previous year.

Look for business deductions. Review last year’s credit card statements carefully. Expenses related to travel, a home office, meals, and even certain purchases (like a new laptop or smartphone) can be deducted as a business expense.

Ask for an extension. You’re more likely to make mistakes on your tax return if you’re rushed or feeling unready. File for an extension before April 18 and buy yourself more time if you need it.

Remember, preparation is key to successfully filing your taxes. Don’t wait until the last minute. Start reviewing documents and making decisions now, so that you won’t feel rushed and stressed in April. If you’re curious about financial planning decisions that can help to reduce next year’s taxes, call us to discuss your retirement savings plan.