Financial Planning Month: Tax Edition

October is Financial Planning Month, and what better way to plan than to take a look at your taxes! You thought you didn’t have to do that until January, right? Not true because now is the time to do everything you can to reduce your taxes. Here are a few tax planning steps that you can take now to help you with your 2023 taxes (the ones you file in 2024) and finances:

Give away things you don’t need

If you missed cleaning out your closet or donating throughout the year, now is a great time to sort your clothes and give things you don’t need or want to a 501(c)(3) charity. There are also qualified organizations that help victims of the recent natural disasters. The benefits of doing this include: you will help someone in need and may be able to get a tax deduction. 

Contribute as much as you can to retirement plans

One of the best ways to benefit financially is to stock money away for your future in a retirement account and garner tax savings at the same time. If your employer matches your contributions, that’s even better. If you have a plan at work, the money comes straight out of your paycheck, so you don’t even have to think about it. You can contribute up to $22,500 for 2023 and an additional $7,500 if you’re 50 or older to an employer-provided retirement account. You can also contribute $6,500 to an IRA (an additional $1,000 if you’re 50 or older) for 2023. 

Get an education and a tax credit

If you are paying for post-high school education for yourself and/or your child, you may be eligible for the American Opportunity Tax Credit or the Lifetime Learning Credit. If you or your dependent are attending college next year, you can pay for the first quarter tuition before the end of this year and reap the benefits of the education credits on your 2023 taxes.

Accelerate tax deductions

Did you receive an unexpected bonus this year that moved you into a higher tax bracket? You may want to move some of your tax-deductible expenses from next year to this year to lower your taxable income and tax bracket if you itemize your tax deductions. You can pay the second half of your 2023 property taxes as long as they were assessed for 2023, pay your January mortgage payment in December, make donations this year instead of next, and pay for those doctor’s visits and possibly take a tax deduction for the expenses you moved into this year to lower your taxes.

When accelerating your property taxes, be aware that there is a cap of up to $10,000 ($5,000 if you are married filing separately) in combined property taxes and either state and local income taxes or sales taxes that you can deduct on your taxes. 

Don’t worry about knowing tax laws. You can come to TurboTax and meet with a TurboTax Full Service expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Live Full Service today, in English or Spanish, and get your taxes done and off your mind.