Important Info for This Tax Season

January 17, 2023
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Happy New Year!


It’s amazing that we’re already in the second half of January!  This is also the time to get thinking about taxes if you haven’t done so already. That said, we have put together some relevant info for you.  


TAX FORM: 

Be on the lookout for the following form:

 

The Schwab Form 1099 Composite & Year End Summary you receive (estimated online availability after February 1st with mailed copies beginning thereafter if not enrolled in e-delivery) contains a lot of tax relevant info such as realized gain/loss data as well as interest & dividend info.

 

Given the typical corrections made to Schwab 1099s after an initial release, we suggest waiting until March 1 before using the tax documents for any tax return preparations.  Due to the nature of heavy mutual fund administration and dividend reclassifications occurring after the calendar year ends, it is common to have another 1099 released a few weeks after the initial release (referred to as a "corrected copy").  By waiting until March 1, this should help avoid the need to file an amended tax return.

 
IRA REMINDER: 

There’s still time to make your 2022 Traditional or Roth IRA contribution. Deadline is April 18. 

 

  • 2022 IRA Contribution Limit: $6,000 + $1,000 catch-up for those age 50 and over.

 
And it’s never too early to get going on this year!

  • 2023 IRA Limit: $6,500 + $1,000 catch-up for those age 50 and over.

 
401K INFO:

It's too late to make a 2022 contribution, but for this calendar year...

  • 2023 Maximum 401K Contribution: $22,500 + $7,500 catch-up for those age 50 and over.

 

Qualified Charitable Distributions (“QCDs”):

For those clients who are 70 ½ or over and make charitable contributions from their IRAs, we have already recapped these non-taxable distributions and sent the details to you.  Please provide these to your CPA as QCDs are not taxable and therefore are reductions from the 1099-Rs you will get from Schwab.

 

529 Plan Contributions: 

529 can be used for college and they can be used, up to $10,000 per year for elementary or secondary education in public, private or religious schools. 529 contributions are considered gifts from parents to their children and qualify for the $17,000 per person annual gift exclusion.  And, with 529s, up to $170,000 can be contributed for a child, making use of 5 years of annual gifts. Of course, all appreciation is tax-free as long as funds are used for qualified educational purposes.   Illinois provides an annual tax deduction of up to $20,000 for a married couple for 529 contributions postmarked within the calendar year.  SC has an unlimited deduction for 529 contributions and contributions for 2022 can be made up to April 18, 2023.  Please let your CPA know if you have made any contributions for 2022.


Health Savings Accounts: 

For those with high-deductible health plans, contributions to health savings can save income taxes and either fund medical expenses or grow as a retirement supplement for years to come. The maximum amount deductible for 2022 is $3,650 for single and $7,300 for families. The 2023 amounts are $3,850 and $7,750 respectively. Contributions for 2022 must be made by April 18, 2023.  Please let your CPA know if you have made any H.S.A. contributions for 2022.

 

Let us or your CPA know if you have any other questions as you get ready for taxes.




Detterbeck Wealth Management is a fee-only financial planning / wealth management company with offices located in Palatine, IL (Chicago area) and Charleston, SC areas serving clients locally and across the country. To contact us about setting up an appointment, please see our contact us page