End of Year Tax Tips 2022
Detroit Fox 2 interview for my end of year tips, only a few made the air today, so here’s the larger list.
Open a First Time Homebuyer Savings Account – Open a new investment account and deposit up to $10,000 if married ($5,000 if single) and you will get a tax deduction on your Michigan Income Taxes, similar rules as 529 college plan. If deposit $10,000 will save you $425 on income taxes when you file in spring. The account can eventually be gifted to anyone, not just yourself, for the tax benefits. This is a new program this year so I will have much more details on this in follow up posts.
Deposit funds into a 529 college or ABLE account to get same Michigan tax deduction as above.
Tis the season to be Charitable. Unfortunately, most of us won’t be “itemizing deductions” anymore unless you have a large mortgage, so we won’t get the benefit of a tax deduction for the charity. Instead, you are gifting it from the bottom of your heart, which is really where it counts!
Call your financial planner and get tips specific to your situation.
Tax loss harvesting: Sell some of your stocks that are down in value and lock in the loss for taxes. You can use the losses to offset other gains and up to $3,000 of other income, and if there is more then that will carry over to next year. Sell your crypto assets and buy them back immediately to lock in the loss. There is no 30 day wash sale rule like there are for stocks. i.e. If you sell Tesla stock for a loss then you can realize the tax loss as long as you don't buy Tesla stock back within 30 days. If you sell Dogecoin then you can buy it right back 2 seconds later and get the tax benefit. That loophole closes in 2023.
Required Minimum Distributions (RMD) they recently increased the starting age to 72 for retirement accounts. Many people didn’t take the RMD in 2021 as the law was waived due to the pandemic.
“Don’t spend your way into stress” on Christmas gifts. We tend to throw money around loosely at this time of year, especially when stress is heightened. But as your Savings Coach, just a reminder to temper the spending as the credit card hangover is coming in January.
Gratitude! Be gracious to those around you. Sending Christmas cards, Calling and visiting friends and family shouldn’t have to cost much around the holidays. Please don’t guilt people for not bringing gifts, we really just want to be around people we care about, that should be the most important thing. Hugs
Start working on your top 10 Gratitude List for the year. Its more effective than a New Year’s Resolution.
A big thank you to all my clients and my family for making this a great year!
Adam Funk, The Savings Coach