2022 High Net Worth Tax Planning

Consider Loss Harvesting – Maximum deductible net capital loss remains $3,000 per year after offsetting capital gains.
Be Wary of Wash Sales – When repurchasing the same stock within 30 days of sale across all of your holding’s losses are limited.
Recognize Capital Gains – Look at unrealized gains before the end of 2022 to capture the appreciation in a potentially lower tax year.
Qualified Small Business Stock Exclusion – Currently, if certain parameters are met, capital gains can be excluded from income under §1202.
Be Aware of the Preferred Long Term Capital Gain Tax Rates of 0%, 15% and 20% – You can pay lower, preferred tax rates at certain income levels.
Net Investment Income Tax (NIIT) Remains – At this time, the 3.8% NIIT is here to stay for taxpayers above the AGI threshold.
Opportunity Zone Investments – While the basis adjustment is no longer available for new investments, Qualified Opportunity Fund investments can still provide current tax deferral of gains and exclusion of future appreciation if holding periods are met.

For Executives, Wage, Or Self-Employed Earners

Defer (Until 2023) or Accept (in 2022) Bonuses - Accelerate or reduce taxable income to maximize tax efficiency.
Maximize Retirement Contributions –

Review your limitations before the end of 2022.
Establish and anticipate how to fund self-employed retirement plans.

Maximize Flexible and Dependent Care Spending Accounts for 2023
Maximize Health Savings Accounts Contributions – If you have a qualified high-deductible health plan.
Remember to Catch-up Contributions – For those over 50 (retirement) or 55 (FSA/HSA).
Revisit Withholding Elections Before Year-End – Ensure you are sufficiently withheld at the federal and state tax level including other pre-tax elections for 401(k) plans and parking/transportation expenses.
Monitor Your Self-Employed Income and Plan for Big Ticket Purchases – With 100% bonus depreciation and bigger expense limitations for M&E and capital expenditures, look at your year-end income for 2022 and factor in QBI deductions as you review future income prospects. Bonus depreciation will start to phase out in 2023 with an 80% deduction in 2023 and less in later years.

For Retirees and Retirement Planning

Contribute and Maximize Your Deductible and Nondeductible IRAs – Don’t forget about the $1,000 catch-up for those eligible.
Contribution and Maximize Non-IRA Plans - Don't forget the 2022 catch-up contributions for 401(k), 403(b), and 457 retirements plans allow a taxpayer an additional contribution amount of up to $6,500 (limited to $3,000 for SIMPLE plans) to be made on top of the annual elective salary deferral limit.
Take Your RMD – The mandatory requirements are back in 2022 for those over 72 years of age unless already started.
Consider Qualified Charitable Distributions – With RMDs back and large standard deductions, you can reduce your AGI up to $100K.
Revisit Inherited IRA Distribution Requirements – While the IRS has provided relief that no excise tax/penalty will be assessed in the 2021 or 2022 taxable year if required minimum distributions were not made for IRA’s inherited (from someone other than surviving spouses or minor children) from a decedent who was already receiving RMD’s, annual RMD’s will be required to be taken in 2023 with a full distribution being required by the end of the 10th calendar year following the decedent’s death.
Consider Roth Conversions – If you are in a lower tax bracket today than you anticipate in the future, it may be time to convert

On the Deduction Side:

Adjustments and Itemized Deduction Considerations

Medical

The 7.5% of AGI floor is permanent for deducting medical expenses. Some over-the-counter medical expenses and menstrual care products are qualified medical expenses for FSAs, HSAs, and medical deductions.

State Taxes

The $10,000 SALT cap remains, but there are workarounds with PTETs.

Charitable

Above the line $300 or $600 charitable deductions are no longer available in 2022
Be aware of AGI limitations on cash contributions in 2022 – 60% of AGI for individuals and 30% AGI limitation for capital gain property
Contribute to donor-advised funds – defer the donation decision to a particular organization while receiving benefit for the donation today (Great for appreciated securities)
Don’t forget about qualified charitable distributions (QCDs) in 2022

Other

Disaster Loss – These must occur in a federally-declared disaster area, so review the outstanding insurance claims to enable a deduction.
Bunch Your Deductions – Apply bunching strategy on medical, charitable, and mortgage expenses in one year or the other, especially if you are close to the itemizing threshold.
Itemize on Federal to Receive State Benefit – Often itemizing at the federal level produces a similar benefit on your state filing.
Receive State Benefit for Miscellaneous Itemized Deductions Subject to 2% Floor – While miscellaneous itemized deductions subject to 2% floor are still disallowed at the federal level, few states still permit the deductions when itemizing.

Gift, Estates and the Family Legacy

Make All Annual Exclusion Gifts – $16,000 per donee annual exclusion gifts ($17,000 per donee in 2023)
Superfund the 529 Plan – Up to $80,000 per donee.

Bonus – These plans may provide a state level tax deduction depending on account owner and state rules

Prepay Tuition and Medical Expenses – These remove assets from your estate and are not taxable gifts and do not reduce the annual exclusion limits.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.