Tax Planning for 2023 - Adviser Investments

Tax Planning for 2023

Woman planning her taxes for 2023.
Tuesday April 18 marked the deadline to file your tax returns for 2022, unless your state granted an extension. 

But that doesn’t mean we’re not thinking about your tax strategy—in many ways, tax planning for 2023 is just kicking off for us. Ultimately, we’re here to help tackle tax issues all year round in the context of your broader financial plan. Feel free to treat this as a mini checklist and let us know if you’d like to meet to discuss your financial plan.

Charitable planning. If you have goals for giving, we can walk you through which types of charitable donations provide the greatest overall tax efficiency. For example:

  • How to make qualified charitable distributions (QCDs) from your IRA—they are excluded from your taxable income and you don’t need to itemize them when you file your tax return.
  • If you are giving stock, long-term appreciated equities are the most tax efficient—the more appreciated the better.
  • From a tax-efficiency perspective, keep in mind that giving cash is the most “expensive” way you can donate or pass along wealth.

Family gifting. Giving money to your loved ones can be an excellent way to set them up for financial success. But remember, the IRS puts a ceiling on how much you can gift untaxed. (In 2023, the gift tax exclusion is $17,000 per person per year for individuals or $34,000 if you file jointly with a spouse.) But we can help you gift above the limit by earmarking funds for the education or medical expenses of family members.

Roth conversions. If you anticipate a low-income year due to early retirement or some other reason, it may make sense to take the opportunity to convert. This strategy can be especially effective if you’ve elected to defer Social Security benefits to age 70—dropping your tax rate even further. The longer you have before you need the money, the more sense it makes to convert assets to a Roth.

Once you convert, qualified withdrawals will never be taxed. Leaving those assets untouched for as long as possible allows them to grow tax-free over time. This will squeeze the most juice out of the conversion.

If you are a client, please reach out so we can continue the conversation to be sure you’re in excellent financial shape this time next year.

If you are not a client, click here to book a meeting with one of our expert financial advisors.

This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.

Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional or licensed insurance professional regarding your specific legal or tax situation, or insurance needs.

Companies mentioned in this article are not necessarily held in client portfolios and our references to them should not be viewed as a recommendation to buy, sell or hold any of them.

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