As you gear up to file your 2023 tax return, there's still a chance to mitigate your tax liability or even snag a refund. Time might be running out, but strategic moves can make a significant difference. Here's what you need to know to potentially lower your 2023 tax bill before the deadline hits.
- Traditional IRA Contributions: One of the most effective ways to reduce your taxable income is by contributing to a traditional IRA. The good news? You can make deductible contributions to your IRA until the original filing deadline, which is April 15, 2024. For 2023, the contribution limit has been set at $6,500, with a $1,000 catch-up contribution allowed for taxpayers aged 50 and above.
- Simplified Employee Pension (SEP) Plans: If you're a small business owner or self-employed, a SEP plan offers another avenue for tax savings. You can establish and contribute to a SEP plan right up to the extended due date of your return. The maximum contribution for 2023 is an impressive $66,000, providing substantial tax benefits for eligible individuals.
Determining Eligibility:
Before rushing to make contributions, it's crucial to understand the eligibility criteria. To qualify for deductible IRA contributions, you (and your spouse) must not be active participants in an employer- sponsored retirement plan, unless your 2023 modified adjusted gross income falls within these limits:
- Single Taxpayers: If you're covered by a workplace retirement plan, your income must fall within the phaseout range of $73,000 to $83,000.
- Married Couples Filing Jointly: The phaseout range varies depending on whether both spouses are covered by a workplace plan. If the spouse making IRA contributions is covered, the range is $116,000 to $136,000. If the spouse making the IRA contributions isn’t covered by a workplace plan but his or her spouse is, the range is $218,000 to $228,000.
- Married Individuals Filing Separately: If you or your spouse is covered by a workplace plan, the phaseout range is $0 to $10,000.
Get Expert Assistance:
Navigating tax strategies can be complex, especially when aiming to maximize your retirement savings while minimizing your tax bill. If you're uncertain about your eligibility or want personalized guidance, don't hesitate to reach out to us. Our team of experts can provide tailored advice to help you optimize your tax-advantaged retirement contributions.
Remember, with the tax filing deadline looming, now is the time to take action. Seizing these last-minute opportunities could lead to substantial tax savings and put you on the path toward a more secure financial future.
The HoganTaylor Tax Practice
If you have any questions about the content of this publication, or if you would like more information about HoganTaylor's Tax practice, please email Tony Otto, Tax Practice Lead, at jotto@hogantaylor.com.
INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.
