Article Highlights:Benefits Sunsetting After 2021Benefits Sunsetting After 2022Not Needing to File May Be an OpportunityMaximize Education Tax CreditsEmployer Health Flexible Spending AccountsMaximize Health Savings Account ContributionsRoth IRA ConversionsAvoid Required Minimum Distribution (RMD) PenaltiesRecognizing Capital LossesTake Advantage of the Zero Capital Gains Tax RateMake Business PurchasesPrepay State Income and 2023 Property TaxesCharitable DeductionsQualified Charitable DistributionsPay Outstanding Medical or Dental BillsRemember the Annual Gift Tax ExemptionAvoid Underpayment PenaltiesDisaster Loss PlanningDivorced or Separated During the YearYear-end is rapidly approaching as are the holidays. So before you become distracted with the seasonal celebrations, it may be in your best interest to consider year-end tax moves that can benefit you for both 2022 and 2023.Having the Congressional members preoccupied with the November mid-term elections has sidelined, at least temporarily, any legislation to extend tax provisions that expired after 2021 and won’t be available for 2022, including: the mortgage insurance premium deduction; increased AGI limit for charitable deductions for those itemizing deductions; the above-the-line charitable deduction for non-itemizers; tax credits for COVID sick and family leave pay for self-employed individuals; the employee retention credit (for employers); the temporary increase in the child tax credit, which reverts to $2,000, the old phase-out levels and the lower age to be a qualifying child; the child and dependent care credit that returns to pre-COVID amounts; and the enhanced earned income tax credit for taxpayers without a qualifying child. Looking forward to 2023, the temporary allowance of a 100% deduction for business meals at a restaurant ends after 2022 and reverts to 50%; bonus depreciation on business property purchases begins to phase out and will only be 80% in 2023.Here are last-minute tax issues you might consider:Not Needing to File May Be an Opportunity - If your income and tax situation is such that you do not need to file for 2022, don’t overlook the opportunity to bring in some additional income, to the extent it will be tax-free. For instance, if you have appreciated stock that you can sell without incurring any tax, consider selling it, or perhaps take a tax-free IRA distribution if you are 59½ or older or if younger and qualify for an exception to the “early withdrawal” penalty. Maximize Education Tax Credits – If you qualify for either the American Opportunity or Lifetime Learning education credits, check to see how much you will have paid in qualified tuition and related expenses in 2022. If it is not the maximum allowed for computing the credits, you can prepay 2023 tuition if it is for an academic period beginning in the first three months of 2023. That will allow you to increase the credit for 2022. This is especially effective for students just starting college who only have tuition expense for part of the year. Employer Health Flexible Spending Accounts – If you contributed too little to cover expenses this year, you may wish to increase the amount you set aside for next year. As a reminder, feminine menstrual products and COVID personal protective equipment now qualify. The maximum contribution for 2022 is $2,850. The amount that may be carried to 2023 is $570 and must be used in the first 2½ months of 2023.Maximize Health Savings Account Contributions – If you become eligible to make health savings account (HSA) contributions late this year, you can make a full year’s worth of deductible HSA contributions even if you were not eligible to make HSA contributions for the entire year. This opportunity applies even if you first become eligible in December. In brief, if you qualify for an HSA, contributions to the account are deductible (within IRS-prescribed limits), earnings on the account are tax-deferred, and distributions are tax-free if made for qualifying medical expenses. Roth IRA Conversions – If your income is unusually low this year, you may wish to consider converting your traditional IRA into a Roth IRA. The lower income results in a lower tax rate, which provides you an opportunity to convert to a Roth IRA at a lower tax amount. Also, the decline in the stock market may provide an opportunity for some to convert where the stocks in their retirement account have had a significant decline in value. Avoid Required Minimum Distribution (RMD) Penalties - Once U.S. taxpayers reach the age of 72, they are required to take what is known as a “required minimum distribution” from their qualified retirement plan or IRA every year. If this is the first year that this rule applies to you and you haven’t withdrawn the required amount yet, there’s no need to panic – you don’t have to do so until sometime during the first quarter of next year. Of course, if you wait until 2023 to take your 2022 distribution, you’re going to end up having to take two distributions in one year – one for 2022 and one for 2023. For those who have fallen into this category before 2022, you only have until December 31st to take the required distribution if you want to avoid penalties. Recognizing Capital Losses – With our current down market you should review your stock portfolio and consider selling losers to offset capital gains that would otherwise be subject to the 15% or 20% long-term capital gains tax rate. Capital losses can also offset up to$3,000 ($1,500 in the case of a married taxpayer filing a separate return) of ordinary income if capital losses exceed capital gains by at least that amount. Recognizing capital losses to offset capital gains can also reduce the amount of income subject to the net investment income surtax. Be aware of the wash sale rules that don’t allow you to deduct a loss if you repurchase those loser stocks within 30 days before or after the sale date. Take Advantage of the Zero Capital Gains Rate - There is a zero long-term capital gains rate for those taxpayers whose taxable income is below the 15% capital gains tax threshold. This may allow you to sell some appreciated securities that you have owned for more than a year and pay no or very little tax on the gain. The 2022 15% capital gains tax bracket starts at taxable income of $83,351 for married joint filers, $55,801 for those filing as head of household, and $41,676 for all other filers.Make Business Purchases - You can reduce taxable income if you make last-minute business purchases such as for office equipment, tools, machinery, and vehicles and write them off using the 100% bonus depreciation or Sec. 179 expensing, provided you place the item(s) into business service by the end of the year. However, you must consider the impact that expensing the items will have on your taxable income and the Sec. 199A 20% pass-through deduction. It may be appropriate to contact this office in advance of any last-minute business acquisition.