Working On Your Taxes? Don’t Miss These 3 Tax Planning Opportunities!

Tax Season Trials

We are deep into tax return season. Most of us are pulling our hair out searching missing deductions to offset last year’s obligation. Or, if you’re REALLY efficient and have finished your 2023 return, you’re probably looking for ways to reduce next year’s bill.

Cheer up, friends. There may be some hope.

I’m Chuck Lewandowski CERTIFIED FINANCIAL PLANNER™ professional. Over the last year, I’ve constructed financial plans using high level tax analysis software that helped clients and their tax advisors identify missed or misunderstood tax planning opportunities. These opportunities could potentially lead to significant reduction in the current and future tax obligations.

Today I want to highlight three areas that were most often overlooked prior to our analysis.

Health Savings Accounts (HSA)

You can file this underappreciated deduction in the misunderstood category. The Health Savings Account allows families who have high deductible health insurance plans to save up to $7750 in 2023. If you’re over 50, you can add an additional $1000.  This account can be used for out-of-pocket medical expenses while reducing your taxable income. Often these accounts are confused with the similarly sounding Flex-Spending Account or FSAs. While Flex Spending accounts must be spent each year or risk forfeiture, HSAs can be carried over to future years. If your tax advisor believes this account works for you, you can still set aside contributions for 2023 up to the day you file your tax return.

Spousal IRAs

If you’re covered by a workplace retirement plan, and your spouse isn’t, contributions to a spousal IRA can help your partner save for retirement and reduce your taxable income. If you’re taxable income is less than $136000 in 2023, you may be eligible to contribute up to $7000 into your spouse’s IRA. If your income is greater than that, you may still be able to contribute to a Roth IRA for your spouse. You won’t reduce your taxable income, but you will increase your retirement savings.

0% Capital Gains Tax Rate

I worked with an executive and a business owner as they approached retirement. They both positioned their investments and saved cash to pay their living expenses for the first couple of years after retiring.  They also had large stock holdings with significant capital gains. By using their savings to pay expenses rather than earning income and limiting ordinary dividends, they will be able to liquidate a good amount of their appreciated stock without paying capital gains taxes.

Tax Planning is not easy. Sometimes tax deductions aren’t obvious. These three examples are just some of the opportunities that can be identified by a developing a financial plan with tools that drill down on tax planning. If you are interested in creating this type of plan, I have the tools to help.

Please give me a call and Let’s Make a Plan!

Advisory Services offered through Lincoln Investment or Capital Analysts, Registered Investment Advisers. Securities offered through Lincoln Investment, Broker Dealer, Member FINRA/SIPC. www.lincolninvestment.com West Coast Financial Group, Inc. and the above firms are independent, and non-affiliated.

Tax services are not offered through, nor supervised by, The Lincoln Investment Companies.