Procrastination is easy, especially when it comes to summertime tax planning. But waiting to implement these planning strategies to reduce your 2023 tax obligations could cost you money. Here are some suggestions to help you get started:

A mid-year review

• Safeguard your deductions. Ensure you can take deductions by keeping great records throughout the year. You’ll need proof if you want tax breaks for things like childcare expenses, charitable contributions, gambling losses, vehicle costs, and travel expenses. So, create a system to keep track of these expenses.
• Save more for retirement. You can save more for retirement in 2023 thanks to inflation-increasing annual contribution limits. You’ve even got time to increase the amount you set aside over the remainder of 2023. This year you can deposit up to $22,500 in your 401(k) and $6,500 into your IRA (additional catch-up contributions apply if you’re 50 or older). You can also contribute to both a 401(k) and an IRA, though tax deductibility on IRA contributions may be limited depending on your income.
• Be tax-savvy about school savings. If you’re setting aside money in a taxable account to pay for your child’s school expenses, you could realize tax savings by opening a 529 education savings account. The sooner you do this, the sooner your earnings will start growing tax-deferred. Your earnings will also generally be tax-free when you use withdrawals for qualified education expenses.
• Adjust your withholdings and estimated payments. If you haven’t already, update your withholdings and estimated tax payments to reflect any changes needed since last year. Updates may be in order if you experience a big life event, such as marriage, divorce, or a new job. Overpaying your 2023 tax reduces the cash you have on hand throughout the year, and underpaying can lead to penalties and interest.

Tax planning for 2023

Please contact our RRBB accountants and advisors if you have questions about tax planning for your 2023 tax return.