Filing your income taxes is typically not the most enjoyable task. It’s the unexpected outcome that can give us the chills.
There is not much you can do about your 2022 tax liabilities at this point, unless you’re eligible for an IRA deduction or are self-employed.
For those age 63 or older, pay attention to line #11 (Adjusted Gross Income). This line, plus any tax-exempt interest, will be the number that determines how much you will pay for Medicare Parts B and D in 2024. Medicare premium levels are determined by your income two tax years prior, unless you have a “life change (i.e.: work stoppage, work reduction, divorce, etc.).” As there is not much you can do at this point for your 2024 premiums, we can certainly plan your 2025 premiums now.
To view how much your Medicare Premiums are for 2023 (which are based on your 2021 tax return), click here to view our 2023 Key Financial Data. Medicare premiums based on income can be found on page 2 in the top right box.
During the last year, we’ve been using tax software that models your future tax liabilities and potential strategies. We can model various techniques to reduce your Adjusted Gross Income and Taxable Income, including Qualified Charitable Contributions, Donor Advised Funds and more. If you’re considering taking larger withdrawals for your IRA’s, it is critical to know how your tax return may be impacted prior to taking the withdrawal.
Keep in mind that for 2023, your Social Security benefit increased by 8.7%. Reflecting this increase on your 2023 tax projection is important!
For clients, please send us your complete 2022 income tax return once available. At our next client meeting, we’ll provide you with a summary of observations and model your 2023 tax options.
We have 3 key reports this week: CPI (Consumer Price Index) report on Tuesday, Retail Sales report on Wednesday, and PPI (Producer Price Index) report on Thursday. Hopefully both the CPI & PPI will continue to move down, suggesting that progress in reducing inflation is continuing.
Since last March, the Fed has raised rates by 4.5%. The Q4 Corporate Earnings are about 70% over, with profits having declined 2.8%. To me, that’s a minor drop in the face of such an aggressive rate hike regimen. The consumer is showing significant resilience for now!
The debate, as we’ve been discussing, has been whether the economy will have a soft or hard landing? A few people are now forecasting growth for our economy in 2023!
What to hope for? How about a “goldilocks economy,” where growth is slow however inflation stays moderate? Wishful thinking?!
As always, if any of your friends or family might benefit from this information, please feel free to share!