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End-of-the-Year Money Moves in 2022

End-of-the-Year Money Moves in 2022

November 29, 2022

For most of us, this year has been as complicated as learning a new dance. As I write this I can hear the "Cha-Cha Slide" playing in my mind. You started a new job this year? ("Sliiiide to the left") Leave a job? ("Sliiiide to the right") You retired? (CRIS CROSS!). If notable changes took place in your life whether they be personal or professional, then you may want to review your finances before this year ends and 2023 begins. Do you have all the moves down? Proving it in 2022 might put you in a better position to tango with 2023.

Your 2022 has been relatively uneventful? That's okay, the end of the year is still an excellent time to get cracking and see where you can make improvements to your overall personal finances.

Please remember, this blog is for informational purposes only and is not a replacement for real-life advice. Please consult your tax, legal and accounting professionals before modifying any strategy you have in place.

Do you engage in tax-loss harvesting?


This is the practice of taking losses (selling securities for less than what you first paid for them) to manage capital gains. This may be something you want to take advantage of, but this should be done with the guidance of a financial professional you trust.1

In fact, you could even take it a step further. Consider that up to $3,000 of capital losses in excess of capital gains can be deducted from ordinary income, and any remaining capital losses above that amount can be carried forward to offset capital gains in upcoming years.1

Should you itemize deductions?


Most Americans take the standard deduction. For the 2022 tax year, it has risen to $12,950 for single filers and $25,900 for joint. If you think your deductions would be above that level it might be better for you to itemize, now would be a good time to gather the receipts and relevant paperwork.2


Are you thinking of gifting?


If you plan to make a donation this year but haven't gotten it to it, make sure your donations to qualified charities and non-profit organizations are done before 2022 ends. Your donation may qualify as a tax deduction. For some gifts, you may be required to itemize deductions using Schedule A.3

Additionally, the year-end is a great opportunity to review your estate strategy. Specifically, take a look at your beneficiary designations. If you haven’t reviewed these designations for some time, now is a great time to double-check your accounts making sure they go where you want them to go in the event that you pass away. Lastly, look at your will to make sure it is still valid and up-to-date.

Check on the amount you have withheld. If you discover that you have withheld too little on your W-4 form so far, you may need to adjust this withholding before the year ends.


What can you do before ringing in the New Year?


New Year’s Eve may put you in a dancing mood, eager to say goodbye to 2022 and welcome 2023. But, before you break out those dancing shoes, consider speaking with a financial and tax professional. Time is running out so do it now, rather than in February or March. Small end-of-year moves might help you improve your short-term and long-term financial situation.

 

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1. https://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp
2. https://www.investopedia.com/terms/s/standarddeduction.asp
3. https://www.irs.gov/forms-pubs/about-schedule-a-form-1040