New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

2022 Year-End Tax Tips Select Medical Holdings

Healthcare Provider Update: Healthcare Provider for Select Medical Holdings: Select Medical Holdings operates primarily through its network of specialized rehabilitation hospitals and outpatient rehabilitation clinics. Their healthcare services focus on providing rehabilitation services for critical illness, physical therapy, and long-term acute care hospitals, making them a significant player in the healthcare sector. Potential Healthcare Cost Increases in 2026: As we approach 2026, significant increases in healthcare costs are anticipated, primarily driven by expected record hikes in Affordable Care Act (ACA) premiums. With states facing premium increases exceeding 60%, many individuals may experience out-of-pocket premium hikes of up to 75%, drastically affecting affordability. Contributing factors include the potential expiration of federal premium subsidies and rising medical costs from hospitals and providers. This perfect storm of financial pressures underlines the urgent need for consumers to prepare for the impending increase in healthcare expenses. Click here to learn more

'For Select Medical Holdings employees, proactive tax planning strategies, like deferring income and accelerating deductions, can significantly enhance retirement readiness, and working with an advisor like Kevin Landis from The Retirement Group, a division of Wealth Enhancement Group, can help you make the most of these opportunities.'

'As the tax landscape evolves, it's crucial for Select Medical Holdings employees to carefully weigh year-end moves such as contributing to retirement accounts or adjusting withholding, and an advisor like Brent Wolf from The Retirement Group, a division of Wealth Enhancement Group, can guide you in optimizing your tax strategy for long-term financial success.'

In this article we will discuss:

1. Tax strategies for employees and retirees of Select Medical Holdings companies, including deferring income and accelerating deductions.
2. Charitable contributions and their impact on tax returns for individuals who itemize deductions.
3. The importance of required minimum distributions (RMDs) and year-end investment decisions.
According to a recent study by the Insured Retirement Institute (IRI), a leading financial research firm, 60% of Baby Boomers plan to continue working in some capacity during retirement. This means that for many employees and retirees of Select Medical Holdings companies, tax planning strategies will continue to be relevant well beyond retirement age. It is important for this demographic to consider the impact of their retirement income on their tax liabilities, as well as the tax implications of continuing to work in retirement. With that taken into account, Here are some factors for employees and retirees of Select Medical Holdings companies to consider as they evaluate potential tax moves between now and the end of the year.
1. Defer income to next year

Consider opportunities to defer income until 2023, especially if you believe you will be in a reduced tax bracket in 2023. For instance, you may be able to defer an end-of-year bonus or delay the collection of business debts, rent, and service payments. As an employee of Select Medical Holdings, doing so may allow you to defer income tax payment until the following year.

2. Accelerate deductions

Employees and retirees of Select Medical Holdings should also seek opportunities to accelerate deductions into the current tax year. If you itemize deductions, paying medical expenses, qualifying interest, and state taxes before the end of the year (instead of paying them in early 2023) could affect your 2022 tax return.

3. Make deductible charitable contributions

Generally, if you are an employee of Select Medical Holdings and itemize deductions on your federal income tax return, you can deduct charitable contributions up to 50% (currently increased to 60% for cash contributions to public charities), 30%, or 20% of your adjusted gross income (AGI), depending on the type of property you donate and the type of organization to which you donate. (Exceeding quantities may be carried forward for a maximum of five years.)

4. Bump up withholding to cover a tax shortfall

If it appears that you will incur federal income tax for the year as an employee of Select Medical Holdings, consider increasing your withholding on Form W-4 for the remainder of the year to cover the shortfall. Time may be limited for Select Medical Holdings employees to request a Form W-4 modification and for their employers to implement the change by 2022. The greatest benefit is that withholding is considered to have been paid equitably throughout the year, as opposed to when the dollars are actually deducted from your paycheck. This strategy can be utilized by employees of Select Medical Holdings to make up for missed or insufficient quarterly estimated tax payments.

5. Save more for retirement

You can reduce your 2022 taxable income through contributions to a traditional IRA and a 401(k) sponsored by a Select Medical Holdings company. If you are an employee of Select Medical Holdings and have not already contributed the maximum amount, you should consider doing so. For 2022, Select Medical Holdings employees can contribute up to $20,500 to a 401(k) plan ($27,000 if over 50) and up to $6,000 to traditional and Roth IRAs combined ($7,000 if over 50).* The window for 2022 contributions to a Select Medical Holdings-sponsored plan typically concludes at the end of the year, whereas the deadline for 2022 IRA contributions is April 18, 2023.

Contributions to a Roth account are not tax-deductible, but qualified Roth distributions are not taxable.

6. Take the required minimum distributions

If you are 72 or older and work for Select Medical Holdings, you are generally required to take required minimum distributions (RMDs) from traditional IRAs and Select Medical Holdings-sponsored retirement plans (exceptions apply if you are still employed and participating in Select Medical Holdings's retirement plan). The deadline for withdrawals is typically the end of the year for most individuals. The penalty for noncompliance is severe: fifty percent of the quantity that was not distributed on time. As an employee of Select Medical Holdings, it is imperative that you make these distributions on time to avoid the late payment penalty.

7. Weigh year-end investment moves

Select Medical Holdings employees and retirees shouldn't let tax considerations dictate investment decisions. Nonetheless, you should consider the tax implications of any year-end investment decisions. If you have realized net capital gains from the sale of securities at a profit, you may be able to avoid taxation on some or all of these gains by selling negative positions. Any losses in excess of your gains as an employee of Select Medical Holdings can be used to mitigate up to $3,000 of ordinary income ($1,500 if your filing status is married filing separately) or carried forward to reduce your tax liability in future years.

Conclusion

Preparing your taxes is like taking care of your health. Just as you need to stay on top of your physical well-being to prevent future health issues, you also need to plan ahead and take the necessary steps to ensure that you're not hit with unexpected tax liabilities in the future. By deferring income, accelerating deductions, making charitable contributions, and contributing to your retirement accounts, you can ensure that your financial health is in good shape for the years ahead. Just as you wouldn't skip your annual check-up, you shouldn't overlook the importance of taking care of your taxes.

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Sources :

1. Weltman, Barbara. '5 Tax Planning Strategies for Your Retirement Income.' Investopedia , 3 Oct. 2022, https://www.investopedia.com/retirement/tax-strategies-your-retirement-income/?utm_source=chatgpt.com .

2. Morgan Stanley. 'Tax-Smart Strategies for Your Retirement.' Morgan Stanley , 2023, https://www.morganstanley.com/articles/tax-strategies-for-retirement?utm_source=chatgpt.com .

3. Vanguard. 'Tax-Efficient Retirement Strategy.' Vanguard , 2023, https://investor.vanguard.com/advice/tax-efficient-retirement-strategy?utm_source=chatgpt.com .

4. Thrivent. '6 Retirement Tax Planning Strategies You Should Know.' Thrivent , 2023, https://www.thrivent.com/insights/taxes/6-retirement-tax-planning-strategies-you-should-know?utm_source=chatgpt.com .

5. New York Life Insurance. 'Tax Planning Strategies for Retirement.' New York Life Insurance , 2023, https://www.newyorklife.com/articles/tax-considerations-in-retirement?utm_source=chatgpt.com .

What is the 401(k) plan offered by Select Medical Holdings?

The 401(k) plan offered by Select Medical Holdings is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.

Does Select Medical Holdings match employee contributions to the 401(k) plan?

Yes, Select Medical Holdings provides a matching contribution to employee 401(k) accounts, subject to certain limits and conditions.

What is the eligibility requirement to participate in Select Medical Holdings' 401(k) plan?

Employees of Select Medical Holdings are typically eligible to participate in the 401(k) plan after completing a specified period of service, as outlined in the plan documents.

How can employees of Select Medical Holdings enroll in the 401(k) plan?

Employees can enroll in the Select Medical Holdings 401(k) plan by completing the enrollment process through the designated online portal or by contacting the HR department for assistance.

What types of investment options are available in the Select Medical Holdings 401(k) plan?

The Select Medical Holdings 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles, allowing employees to choose based on their risk tolerance.

Can employees of Select Medical Holdings take loans against their 401(k) savings?

Yes, Select Medical Holdings allows employees to take loans against their 401(k) savings, subject to the terms and conditions of the plan.

What happens to the 401(k) plan if an employee leaves Select Medical Holdings?

If an employee leaves Select Medical Holdings, they have several options for their 401(k) savings, including rolling over the balance into an IRA or a new employer's plan.

Are there any fees associated with the Select Medical Holdings 401(k) plan?

Yes, there may be administrative fees and investment-related fees associated with the Select Medical Holdings 401(k) plan, which are disclosed in the plan documents.

How often can employees change their contribution rates to the Select Medical Holdings 401(k) plan?

Employees can typically change their contribution rates to the Select Medical Holdings 401(k) plan at any time, subject to the plan's guidelines.

Does Select Medical Holdings provide financial education regarding the 401(k) plan?

Yes, Select Medical Holdings offers resources and financial education to help employees make informed decisions about their 401(k) savings and investments.