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  • Writer's pictureThe Lincoln Accounting Team

Countdown to 24

Six days left...


Until what you ask? Until 2023 comes to a close, of course.


It's been a year, we know. So don't forget to take advantage and make some moves to minimize your tax liability.


And guess what? There are legal ways to keep more of your hard-earned cash.


So, let’s talk strategies to keep more and pay less.


First, if you’re 73 or older, take your required minimum distributions (RMDs) before year-end.


Miss the deadline? Bam! 25% penalty! There's no going back so take care of it.


Next, max out your 401(k) contributions.


The limit in 2023 is $22,500. Or $30,000 if you’re 50 or older.


And if you're earning big, consider a Roth conversion.


Shifting your traditional IRA savings to a Roth IRA could mean tax-free withdrawals in retirement.


Nifty, we know.


Just be sure you don't cross into the next tax bracket. Ouch!


For example, if you're single and earn $175,000, you fall in the 24% tax bracket. Convert over $7,100, and you’ll be slapped with a higher tax bill.


Also, think about optimizing your giving.


Yeah, it feels good to help others, but it can also reduce your tax bill.


In general, you can deduct cash donations up to 60% of your adjusted gross income.


And finally, consider a mega backdoor Roth. It lets you bypass Roth IRA income limits.


Just max out your 401(k) contributions first, then add after-tax dollars up to the overall limit of $66,000 in 2023.


Then, roll those funds into a Roth IRA and watch them grow tax-free.


And remember, Tax Day isn't just about paying up.


You've got until then to max out other tax-deferred savings accounts.


For 2023, the limits are $3,850 for individual HSAs and up to $6,500 for traditional IRAs.


So, are you ready to keep more?


R&S


P.S. Did you know you can give away up to $17,000 per person in 2023 without impacting your lifetime estate- and gift-tax exemption? It won't reduce your taxable income, but it's a great way to transfer wealth to your heirs tax-free. Ready to learn more about tax-smart strategies? Check out our tax planning guide by clicking here and requesting a free copy.

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