You may assume that there are no more tax minimization strategies to engage in after December 31. While most of your tax-lowering strategies do come before the new year, there are still steps you can take now, and all the way up until the filing date to make the process easier, and cheaper, and help reduce your tax burden.
For instance, you can still make IRA contributions that are tax-deferred that count towards your 2022 tax year all the way up until the filing due date. Contributing to a traditional IRA removes that contribution amount from your taxable income, leaving less money subject to taxes come filing time. Making a deductible contribution will help you lower your tax bill this year. Plus, your contributions will grow and compound tax-deferred!
If your payments to the IRS came up short, you may face a larger tax bill than you thought given the associated interest and penalty fees. According to IRS rules, 100% of last year’s tax liability or 90% of this year’s tax is owed. Otherwise, you will owe what’s called an underpayment penalty. What’s more is that if your AGI (adjusted gross income) for 2021 was more than $150,000, you must pay more than 110% of your 2021 tax liability to be protected from your tax year 2022 underpayment penalty.
However, there are ways to make sure this predicament isn’t worse for you than it needs to be! The date you need to keep in mind is January 15! If you make an estimated payment by January 15, you can erase penalties for fourth-quarter taxes, but you will still owe a penalty for earlier quarters if you did not send in any estimated payments at that time.
We’re only scratching the surface of ways to help optimize your tax situation. And that’s not to mention the basics such as getting your W2s, 1099s, and itemized deduction files organized well before filing time.
When it comes time to file your taxes, a tax professional can help. But filing your taxes is just one piece of the puzzle. A financial professional may be able to help you structure and plan your retirement investments to better optimize your tax situation as well. To get started with a financial advisor, contact us at (540) 720-5656.
Amy Anderson joined the ILG Financial team in 2023 as the client relations coordinator. Her responsibilities include scheduling of appointments, annual check-up notifications, and annuity and required minimum distribution assistance. She is a graduate of Harding University with a degree in Computer Information Systems. Amy and her husband have two children and she enjoys reading, crocheting, music and spending time with her family.
Chase Lopez joined the ILG Financial team in 2020 as an advisor. Chase is a 2016 James Madison University graduate with a degree in management. Chase has been trained under the tutelage of Dave Lopez, who is not only the founder and managing member of ILG Financial, but also is Chase’s uncle and godfather. He also enjoys working alongside his cousin, Megan, who is Dave’s daughter. Chase, as a fiduciary, believes in putting his clients interests first, and building out plans for his clients where they can have a happy and fruitful retirement. He married his beautiful wife in February 2022 and both use most of their free time chasing around their little pup, Aurora.
Jessica Carson joined the ILG Financial team in 2018 as an agent. Jessica and her husband have four children, two dogs, 3 barn cats, 5 chickens, and three parakeets. She indeed loves her children and pets! When not at work, Jessica enjoys playing the piano and cello as well as traveling and spending time outside with her family, hiking, fishing, and boating.
Terri Center joined the ILG Financial team in 2019 as client services manager. She handles client records, application processing, and gathering information to provide a professional and friendly experience with all of our clients. Terri is a graduate of Oakland University. She is married and has two children. She enjoys hiking, family time, and puzzle challenging video games. She also likes to share her creativity in her canvas paintings and sewing projects.
Megan Jones joined the ILG Financial team in 2020 as marketing director. Megan and her husband live in Fredericksburg, VA with their German Short Haired Pointer, Gus. Megan is a graduate of Longwood University and holds a degree in communications. Megan is the oldest of Dave Lopez’s three children and not only enjoys working alongside her father, but also with her cousin, Chase, who joined the ILG Financial team in 2020 as an advisor. When not at work, Megan enjoys sitting on the back porch with family and friends enjoying food and music.