This year at this time, many of us are utilizing our time in the end of summer, going to the beach a few extra times, and gearing up for our kids to head back to school. So for that reason, it’s natural for many of us not to be paying attention to our taxes.
You don’t have to worry right now about filing your upcoming taxes, but there are certain tax matters that need your attention. Here are few crucial tax moves should be made before the end of 2022.
Put money into your HSA
If you have a high-deductible health insurance plan this year, you may be eligible for an HSA. Even if you don’t frequently pay large medical expenses, it still makes sense to contribute to that account.
HSA accounts never expire, and any money you don’t spend right away can be invested for future growth. By beginning contributions to an HSA now, you might be better equipped to deal with future increases in medical costs. You can establish an HSA to lower your 2022 tax obligation since, like ordinary IRAs, they offer a tax benefit on the money you donate.
Adding more to IRA contributions
You’ll need money to pay your bills in retirement, which is where the money in your IRA comes in. However, you should also be aware that the more you contribute to a regular IRA (up to the annual maximum), the less money you will have to pay in taxes in 2022. So, if you haven’t already begun, it would be a good idea to start contributing more funds to your IRA right away. You must do this by making the maximum annual contribution to your IRA, which is $6,000 for those under 50 and $7,000 for those over 50.
Obviously, it will still take you a few more months to contribute the maximum to your IRA. Additionally, you are not obligated to complete your giving by December. Up to the deadline for filing your taxes, you can really make contributions to an IRA in a given year. So technically, if you want to make the maximum contribution to your 2022 IRA, you have until April 2023.
Delaying such gifts, though, would just make it more challenging for you to raise the money. Instead, alter your budget so that you can give frequently.
Examine your FSA balance
If your health insurance policy disqualifies you, you may have chosen an FSA instead of an HSA when you joined up. With FSAs, contribution tax advantages are also available. You cannot carry over that money into a later plan year, unlike HSAs. You should rapidly check your FSA balance and make plans to use it all up to prevent losing money.
Unsure about the best way to spend your money? Think about the constant medical expenses you have. Can you obtain prescriptions in bulk or renew your contact lenses and pay in advance for those services? The sooner you start making plans in that direction, the less probable it is that you will lose your money, even though you still have a few months to spend down your FSA.
Taxes are a part of life even when you’re not focused on filing a return. Watch out for these techniques so you may gain the most from your tax-advantaged accounts while paying the IRS the least amount of money possible.