BMLpL

Bank of America Corporation Bank of America Corporation Depositary Shares (Each representing a 1/120

22.3200
USD
0.68%
22.3200
USD
0.68%
18.4500 25.9100
52 weeks
52 weeks

Mkt Cap 116.06B

Shares Out 5.20B

Chat
Send me real-time posts from this site at my email

3 Moves You Can Make Today to Save Money on Your Taxes Next Year

At this point, the 2022 tax-filing season is nothing but a memory for many filers. But if you're the type of person who tends to think about a lot, then you may already be dreading the 2023 filing season. This especially applies if you tend to owe the IRS money. The good news, though, is that you're not doomed to have to write a large check next year. If you make these moves sooner rather than later, you can set yourself up to pay less in taxes to the IRS in 2023 -- without breaking the law in any shape or form. 1. Max out your IRA contributions An IRA lets you save money for retirement in a tax-advantaged manner. Now there are two main types of IRA you can open -- a traditional IRA and a Roth IRA. A Roth IRA won't give you an immediate tax break on the money you put in. But a traditional IRA will. And so if you max out a traditional IRA this year, you'll shield some of your earnings from taxes. Currently, you can contribute up to $6,000 a year to an IRA (whether it's a traditional or a Roth) if you're under the age of 50. If you're 50 or older, that limit rises to $7,000. If you're 45 and contribute this year's max, it means the IRS won't be able to tax you on $6,000 of earnings. The result? A lower bill come tax time. 2. Wait at least a year and a day before selling investments in a brokerage account When you sell investments at a profit in an IRA, you're not taxed on that money immediately. Rather, gains are tax-deferred with a traditional IRA, and you don't have to worry about taxes on them until you start taking withdrawals from your account. (With a Roth IRA, investment gains are tax-free.) But if you sell investments at a profit in a regular brokerage account, you will have to pay taxes on those gains sooner rather than later. In fact, if you lock in gains in your brokerage account this year, you'll have to pay up when you file your 2022 tax return in 2023. That's why it's important to make sure you hold your investments for at least a year and a day before selling them at a profit. If you go that route, it'll count as long-term capital gains, which are taxed at a much lower rate than short-term capital gains. Short-term capital gains are those that apply to investments you hold for a year or less before selling. 3. Buy a home Clearly, you can't just snap your fingers and become a homeowner overnight. But if you've been saving for a home purchase and manage to ramp up your search, you could benefit tax-wise. There are different tax breaks you can enjoy as a homeowner, and a big one is the option to deduct the interest you pay on your mortgage (to be clear, though, that doesn't mean your entire mortgage payment is tax-deductible). You can also deduct the property taxes you have to pay, though depending on what those amount to and what your local income taxes look like, you may only be able to deduct a portion of your property tax bill (and some homeowners can't benefit from this deduction at all). Nobody likes to pay more taxes than necessary. If you can make these moves soon, you can set yourself up to be a much happier person when the time comes to file your 2022 return next year. We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue