7 Midyear Tax Moves You Can Make Now

July 2023

I know its summer time and the last thing you want to think about is taxes. This is a good time to plan for next year’s income tax returns personal or business. A lot of people wait until December to start thinking about their taxes. If you have a good idea of what your earnings will be, then this is the time to take steps that could cut your tax liability or increase your refund.

Before we begin to strategize for next year. Many of you have not filed your 2022 Income Tax Returns. The extensions are good until October 15th, 2023. I have come across a number of people in the last few months that haven’t file taxes for a few years. For tax years 2021, & 2020 it’s not too late to file an income tax return and receive a refund, if you are due one.

Here are 7 things you can do now to help you with your 2023 taxes.

1- Adjust Your Withholding

Did you get a big refund? Are you struggling to pay your bills? Did you have a larger tax bill last year? Then you might consider adjusting your withholdings on your paycheck to get more take home pay or adjust the amount of deductions to reduce your tax liability come tax time next year. Many of you have realized your refunds are getting less each year, while others are paying more at tax time. IRS adjusted the Tax Withholding Table over the last few years so it might be time to make your adjustments

2-Monitor Investment Portfolio

Work with your investment advisor to monitor the markets and harvest tax losses to offset capital gains if it makes sense considering your all investment strategy.

3-Evaluate Your Estimated Taxes

Estimated tax payments are required if you get income that isn’t subject to withholding. It’s the IRS way of making sure you’re paying on your income throughout the year. By making the four payments a year, you help to ensure you don’t underpay your taxes. Summer’s a great time to reassess your estimated tax situation. Look at what you’ve paid if anything on April 15 and June 15th (1040 ES) to see whether your on track for 2023 taxes, If not, you can adjust your upcoming Sep 15th and Jan15th, 2024 tax payments.

4-Contribute to Your Retirement Plan

Earlier is better when it comes to your retirement plans. The sooner you contribute to your retirement account, either a traditional IRA or Roth, the sooner the account starts earning money. If your employer offers a 401(K) and you haven’t taken advantage, check on the enrollment details. If you are already contributing. See whether you can afford to increase your contributions. This money comes out of your paycheck before taxes are calculated, meaning you’ll get an immediate tax break on your earnings.

5-Real Estate Sales

The real estate market is hot, which means many sellers will be realizing large gains on the sale of their homes. Remember, if you sell your home, and it has been your primary residence two of the last five years, single filers can exclude gains up to $250,000 and joints filers up to $500,000. So it is very important to keep good records and receipts. This would include purchase documents, listing of capital improvements as well as all selling expenses.

6-Health Savings Account

Make sure you maximize your HSA contribution by the end of 2023. The maximum contribution is $3,600 for individual plans and $7,200 for family plans.

7-Business Tax Planning

Many taxpayers include income (or loss) on their individual tax filings as a result of Sole Proprietorship, Single Member LLC, and Multi-Member LLC, Partnerships or S Corporation ownership. When implementing some or all of the above strategies please consider your income source from your business as part of your overall planning.

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