Tax Savings Strategies for 2023 to Maximize Your Refund

Summary:

[168] – There are only 10 days left in the tax year. What can you do right now to maximize your refund?

In this episode, Jeremy Keil discusses strategies for maximizing tax refunds and retirement savings. He highlights the importance of understanding tax underpayments and potential penalties, as well as the deadlines for withdrawing required minimum distributions and making charitable contributions. Jeremy also covers the benefits of contributing to a 401(k), HSA, and 529 plan, and the importance of working with a financial professional.

Jeremy discusses:

• What deadlines fall on December 31st of this year
• Maxing out your paycheck contributions to a 401(k) plan to increase your annual tax refund
• Prepaying taxes on interest earned from CDs or online savings accounts by making quarterly estimated tax payments
• Deadlines for contributing to a 401(k), HSA, and 529 plan
• And more

Tax Savings Strategies for 2023: Maximize Your Refund with These Smart Moves

Why should I care about tax refunds in 2023?

We don’t usually talk about refunds, just tax bills, but this year, in 2023, understanding the significance of tax refunds becomes crucial, and it goes beyond the initial joy of receiving money back.

It’s common to focus on the refund itself, but the real key is your tax bill. Recent IRS announcements have heightened the importance of this distinction, revealing penalties of 8% for the federal and 12% for the state of Wisconsin for underpayment. The state penalties vary, so make sure to check your state’s penalty with your CPA.

This penalty rate is a significant increase from just two years ago, making it imperative to assess not only whether you’re getting a refund but also to scrutinize your underpayments.

The penalty for neglecting this aspect is now steeper, signaling that your attention should be on the taxes paid rather than the refund received.

What’s due on December 31st?

In the rush of year-end festivities, December 31st takes center stage with critical financial deadlines you can’t afford to overlook.

Let’s break down the essentials, starting with the deadline for withdrawing your required minimum distribution (RMD). If you’re 73 or older or inherited money, this is a crucial date. Your RMD amount, a complex calculation involving divisors, must be determined and withdrawn by December 31st, ensuring compliance with IRS regulations.

Additionally, December 31st is your deadline for charitable gifting. Direct stock transfers to charities must occur by December 29th, while checks must be delivered or postmarked by December 31st.

As the year wraps up, the 31st of December is also your deadline to contribute to your 401(k). Maxing out your 401(k) contributions by December 31st can help reduce your taxable income and potentially boost your tax refund. 

So, as the clock ticks down, be sure to mark your calendar and take action on these key financial milestones before the ball drops.

What other deadlines should I keep in mind?

As the calendar turns, there are crucial financial deadlines extending beyond the year-end rush. 

If 2023 has brought you increased interest earnings, especially from CDs, be aware that taxes on interest aren’t automatically withheld. To avoid penalties, preemptively addressing potential tax owed on interest through quarterly estimated tax payments can help.

Additionally, we’d like to underscore two April 15th deadlines for contributions – HSA and 529 plans.

For the Health Savings Account (HSA), contributions made by the tax day deadline can count toward the prior year, offering a strategic way to optimize your tax position.

Similarly, 529 plans can be funded up to April 15th, with certain states providing tax deductions, exemplified by Wisconsin and Illinois.

So, beyond the December 31st whirlwind, remember these April deadlines as strategic opportunities to refine your financial plan for the preceding year. 

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To learn more about Tax Savings Strategies for 2023, check out the resources below!

If you have any questions, feel free to contact us using the contact information provided below!

Resources:

• The Wall Street Journal: Don’t Miss Out on Your 2023 Tax Breaks
• College Illinois: How Does It Work
• EDVEST 529: What’s the best way to save?
• Free Retirement Planning Video Course: 5stepretirementplan.com
• 3 Things You Should Know Before Choosing A Financial Advisor
• 7 Questions That Could Make or Break Your Retirement
• Subscribe to Retirement Revealed on Google Podcasts
• Subscribe to Retirement Revealed on Apple Podcasts

Connect With Jeremy Keil:

• Jeremy@keilfp.com
• 262-333-8353
• Keil Financial Partners
• LinkedIn: Jeremy Keil
• Facebook: Jeremy Keil
• LinkedIn: Keil Financial Partners
• YouTube: Retirement Revealed
• Book a call with Jeremy

Disclosures:

Content

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No Tax Advice

Keil Financial Partners does not provide any tax advice. No information or results from the links should be interpreted as tax advice. Please seek guidance from a qualified tax professional for any and all tax-related matters.

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The content and information provided through the links should not be interpreted as being investment advice or a recommendation of suitability for any particular security, portfolio of securities, transaction, or investment strategy, or related decision. Please seek assistance from a qualified investment professional for any and all investment matters.

Investment Risk

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General Disclosure

Advisory Persons of Thrivent provide advisory services under a “doing business as” name or may have their own legal business entities. However, advisory services are engaged exclusively through Thrivent Advisor Network, LLC, a registered investment adviser. Keil Financial Partners and Thrivent Advisor Network, LLC are not affiliated companies. Please visit our website www.keilfp.com for important disclosures.