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Simple Tax Saving Tips

Simple Tax Saving Tips

Bob The Broker
Bob Friel
Published on January 24, 2023

Simple Tax Saving Tips

I don't know about you but I'm pretty happy 2022 is coming to an end.  The housing & mortgage industry has been in a recession the entire year.  My forecast is that the US economy will hit a recession in 2023 so I wanted to share a couple ways you can save on your taxes this year so that you may be able to stash away some dough if hard times hit you 

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Here are 8 tax saving tips that I found online from Principal  & from my own account setup and best practices.

Let's start simple, for 2023 and beyond tax filings….

  1. Don't forget to File on time.

If you don't file federal taxes or file for an extension by April 18, 2023, you may face hefty fines. Each state has different filing dates so check your state filing deadline.  In CO it's April, 18th 2023 so just google state tax deadline 2023 and you will find yours.

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  1. Contribute to your health savings account (HSA).

If your company doesn’t have an HSA or you are self-employed, like I am, a brokerage like Fidelity has HSA plans.  The thing I like about the fidelity option, is that you can invest the $$ in the brokerage account in the market.  And it is triple tax advantaged.

Meaning, you get the deduction now on your tax year, it can grow tax free to use at retirement age, & you can pull $$ out tax free for healthcare bills

See the contribution details for 2022 below

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Consumers can contribute up to the annual maximum amount as determined by the IRS. Maximum contribution amounts for 2022 are $3,650 for self-only and $7,300 for families. The annual "catch-up" contribution amount for individuals age 55 or older will remain $1,000.

3A. MAX-OUT your retirement contributions. Increase retirement account contributions to reduce taxable income.

Maxing out is quite possibly the best thing a w2 employee can do.  

NOTE: the company match doesn’t count against this number, meaning that you can save even more on top of these figures:

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The limit on employee elective deferrals (for traditional and safe harbor plans) is: $22,500 in 2023 ($20,500 in 2022, $19,500 in 2021 and 2020; and $19,000 in 2019), subject to cost-of-living adjustments.

I got the following information from the Principal website.

Traditional IRA and 401(k) or 403(b) contributions are typically made with pre-tax dollars, so adding to either can result in tax savings by reducing taxable income.

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4 strategies that help you save for retirement and save on taxes

Self-employed or a business owner? SEP or Simple IRA
50 or older? Catch-up contributions (if allowed by your plan) to a 401(k) or 403(b) (an additional $7,500 for 2022) or IRA (an additional $1,000). Learn more about catch-up contributions.
Tax-free retirement withdrawals? A Roth IRA or Roth contributions to a 401(k) (if available): Set up with post-tax dollars now so you can make qualified tax-free withdrawals later. Learn more about Roth IRAs.
More retirement savings dollars?

3. Add to 529 college savings.

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529s offer potential tax savings in two ways: While contributions are made with after-tax dollars, earnings are tax-deferred while invested - and money you use for qualified educational expenses isn't taxed. Those 529 contributions may also qualify for state income tax deductions or credits.

Learn more about the tax advantages of a 529 plan.

401(k) or 403(b): Boost contribution levels.
  1. Make sure you have your paycheck withholdings figured out.

Also from the Principal website: According to the IRS…The average tax refund in 2022 was $3,039 - an increase of more than 7% and about $250 a month. But on the flip side, withhold too little taxes from your paycheck and you could end up owing money (maybe even be charged a penalty). You can change your payroll tax withholdings at any time; check with your human resources department for information.

  1. Pay for the absolute best CPA you can afford.

You need to make sure a professional is analyzing your finances, and helping you qualify for each and every tax deduction that applies to you. 

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A quality CPA will know the tax law and can make use you get the most out of deductions such as:

  • Home mortgage interest
  • Property Taxes Whether you itemize or take a standard deduction will depend on your situation. 
  • Did you do Home energy efficiency improvements, like windows to solar hot water? 
  • The expanded child tax credit (CTC) for any dependent under the age of 18.
  • What about that EV?

NOTE: Whether you itemize or take a standard deduction will depend on your situation.

Now there are more deductions out there but these are some quick and easy ones that you can implement for the 2022 tax year and the tax years in the future.

It takes a little time to sort out the details & accounts of the IRA, the 529 or the HSA for example but once the busy work is completed you can use the deductions in the future and simply make the contributions.

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