New Year Financial Tips: Financial Planning for the Upcoming Year

For both business owners and individual taxpayers, it can be easy to put off thinking about financial planning for the year ahead. However, noting a few key dates now can be helpful. Similarly, understanding how the IRS’ recent inflation adjustments and how they may affect you is important.

Tax Deadlines for 2022

Here are a few dates to mark in your calendar if you have not already.

1. January 15, 2022 – 4th quarter yr 2021 estimated tax is due
2. March 15, 2022 – partnership & S-corp tax returns are due or can be extended (generally, no tax due).
3. April 15, 2022 – Pay any remaining 2021 individual tax with tax return or with extension
4. April 15, 2022 – 1st Qtr estimated tax due
5. April 15, 2022 – Final date for Year 2021 Health Savings Account contributions
6. April 15, 2022 – Final date for Year 2021 IRA contributions
7. April 15, 2022 – Final date for Year 2021 Arizona State Tax Credit donations
8. June 15, 2022 – 2nd qtr estimated tax payment due
9. Sept 15, 2022 – 3rd qtr estimated tax payment due
10. Sept 30, 2022 – Last date for employers to establish deferred compensation plans, such as Simple IRA, 401(k), Defined Benefit Plans. This is very important for small employers to plan for.

More New Year Financial Tips

1. Review or create your estate plan. If you don’t have one yet, you can start with our estate planning checklist. Congress is currently weighing substantial changes to the way Estates are taxed. Even if you have a modest estate, considering how it will be disbursed is wise.

   Although no change has occurred in the tax law yet, discuss this with a tax advisor so you know what to expect.  Because estate taxes have not affected the vast majority of taxpayers for the last 20 years, it is often not on the tax advisor’s checklist of discussion items. Therefore, you’ll want to bring it up when you meet.

2. Invest in a deferred compensation plan. Far too many people skip or delay retirement contributions, but they make a big difference.

   IRAs and other deferred compensation plans are a double benefit. First, they typically lower your taxable income. Second, you keep the money and can invest or save until retirement and spend at possibly a lower tax rate in the future. There are a few caveats depending on the type of plan you choose—especially if it’s offered through an employer. You should discuss the pros and cons with an advisor first.

   These plans are widely available to everyone. A tax advisor can help you choose or set one up if desired. And it pays to start early— a 21 year old contributing just $6,000 a year to an IRA will have hundreds of thousands of dollars saved by age 59 1/2. That is the genius of compound interest.

3. Consider capital gains. If you are considering liquidating a long-term investment, such as stocks, bonds, or real estate, discuss it with your tax advisor to find out what tax impact it may have.

   As of the date of this printing, long-term capital gains tax rates remain 20% maximum. Sometimes, it can be as low as 0%. We do not know if that will change, but those are historically low tax rates. Additionally, New Mexico offers a deduction on federally taxable gains.

4. Pay off debt. Seriously—there is no tax value in your consumer debt. Ditto your home mortgage. Do be cautious about debt settlement as a means to an end. Not only does it impact your credit score, but you’ll actually be responsible for paying taxes on the amount of debt not paid. It’s usually reported to the IRS as income via a 1099-C.

Your Tax Strategy for 2022

Planning a tax strategy doesn’t have to be stressful. Implementing additional strategies to reduce your tax liability can help preserve wealth, limit liability, and reduce the probability of being selected for audit. We’re here to help. Book a consultation so we can discuss your specific questions as the new year begins.