2022’s Top 5 Essential Tax Tips

Nothing to see here unless you want to save money

As you get your 2021 taxes filed, it is not too early to start planning for 2022's tax strategy.

It’s important that as you build your plan, you think about some strategies to reduce or defer your taxes now or in the future. Here are some strategies to consider helping your financial/tax plan become more tax-efficient:

1. Tax harvesting

Usually, this strategy is implemented near the end of the calendar year, but it can be done at any time. With tax-loss harvesting, you sell off holdings that have a loss position to offset the gains you’ve experienced from other sales.

The asset you sold is then replaced with a similar investment to maintain the portfolio’s asset allocation and expected risk and return levels. It won’t restore your losses, but it can ease the pain.

2. Using long-term gains and the 0% tax rate

For those who fall within the 15% tax bracket, your long-term gains are tax-free. Make it a habit to project your taxes and to look for tax opportunities every year as part of your plan. Even if higher rates, it may make sense to take some gains off the table now!

3. Making IRA contributions

You have until the upcoming April’s Tax Day to make a Roth or traditional IRA contribution for that tax year, but why put it off? In fact, you could even use your income tax refund to fund it. Remember, a Roth…