Take some tax-saving actions now as the year winds down. CPA and TurboTax expert Lisa Greene-Lewis explains what moves you should make now to ease your tax burden come April. Watch the video above or read the transcript below to learn more.
Video transcript:
Tracy Byrnes: So this year is flying by, and before we get to the end, there's a bunch of things you could do to minimize your tax hit next April. Lisa Greene-Lewis, TurboTax expert and CPA, is here with us right now. Look, no one wants to talk about taxes, but we really should be thinking about it. And there's a bunch of things we could do. The biggest, of course, that people always think about is maximizing itemized deductions, and that's when we think about charity.
Lisa Greene-Lewis: Yes, you want to maximize your deductions, and if you're close, about 90% of people get the standard deduction, which for tax year 2023, it's $13,850 if you're single. Married filing jointly, it's $27,700. But if you're close to being able to itemize, which means you would be over that standard deduction, you might want to donate to charity because you would be able to get a deduction for that. And then you would be bumped into itemized deductions where you may be able to claim more deductions than just the standard.
Tracy Byrnes: I always say, think about your local police, firefighters, EMTs. Don't forget to donate to them before the end of the year. We also talked about retirement accounts and maxing them out. What should people know?
Lisa Greene-Lewis: For retirement accounts every year, the amount that you can contribute and max out, it increases. So for 401(k), you can max out at $22,500 contribution, and then you get an extra $7,500 if you're 50 and over. And then for an IRA, you can contribute up to $6,500. An additional $1,000 if you're 50 and over.
So you really want to think about that. And then if you're self-employed, you can do a SEP IRA, and that amount is the lesser of 25% of your income or $66,000. And that can really help lower your taxable income by making those moves.
Tracy Byrnes: Yeah, and there's a bunch of calculators out there, and TurboTax can help with this to show you how much you'll save. So it's really important for people to at least play around with the numbers and get a sense of it. Also many, many companies offer health savings accounts. What do people need to know about that?
Lisa Greene-Lewis: Yeah, so a health savings account, you can contribute up to $3,850 if you're single, and a family plan is $7,750.
Tracy Byrnes: And people should know if they don't use it, they could roll that and keep rolling it and use it almost as another savings vehicle, deferred savings vehicle, I should say. And finally, start thinking about your capital gains and losses. There's been a bunch of market moves this year. So there's got to be a way to take advantage of it.
Lisa Greene-Lewis: Right, if you have some losing stock, and it's just not performing well, if you sell it, just remember that can use tax loss harvesting and offset those losses against your gains. And then you can offset up to $3,000 of a net loss against your ordinary income like your wages.
Tracy Byrnes: How do we plan for year end? How do we keep track of all this because there's a lot to know?
Lisa Greene-Lewis: TurboTax has TurboTax Tax Caster, and it helps you plan by the end of the year, and it gives you a sense of where you stand in your taxes, whether you're going to get a tax refund or whether you're going to owe it. By using that tool, you can make smart moves by the end of the year to help you maximize your refund or lower what you owe.
Tracy Byrnes: Lisa Greene-Lewis, TurboTax expert, thank you for all of that.
Lisa Greene-Lewis: Thank you for having me.
Editor's Note: The content was reviewed for tax accuracy by a TurboTax CPA expert for the 2022 tax year.
