Personal Finance
How to file your 2023 taxes and get the most out of your return
With the April 18 tax deadline sitting on the horizon, one expert and CPA shared important tips for getting the most money from your individual or small business tax returns this season.
“If you have an IRA, an individual retirement account, you still have until April 18th to make your full contribution for 2022. That’s about $6,000,” The Marks Group president Gene Marks said on “Mornings with Maria” Wednesday.
Most taxpayers will have until Tuesday, April 18 to submit their returns or request an extension. That’s because April 15, the typical deadline, falls on a Saturday, and April 17 is the Emancipation Day holiday in Washington, where the IRS is headquartered.
“But the big thing I want to get across,” Marks told host Maria Bartiromo, “is Roth IRAs and Roth 401(k)s – that is where you can make an after-tax contribution, and then it will grow tax-free, and you can take it out tax-free.”
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“So with the stock market being down like 15% from its overall highs, I have a lot of clients that are putting money into their Roth IRAs or their Roth 401(k)s, and then they’re hopefully going to ride out that gain when, hopefully, inevitably, the stock market recovers,” the CPA continued. “So it’s a real good way to save on taxes as your money grows.”
Another “super popular” tax tip Mark suggested is called a “wash sale,” which is a way to take advantage of loss in a stock.
“You have a stock. Maybe you’ve lost money on the stock, which is not unusual right now,” Marks started to explain. “So you can sell that stock, and if you have a loss on it, you can offset it against any capital gains, and, you can even take $3,000 of that loss and offset it against your regular ordinary income. If you just hold back for 30 days, you can buy that stock back again.”
“We’ve trained thousands of new employees to answer phones and help people. While much work remains after several difficult years, we expect people to experience improvements this tax season.”
Hopefully the stock doesn’t grow that much over 30 days, wait it out and then buy the stock back again after 30 days. So there you sort of have your cake and eat it, too, and save a few bucks on your taxes,” he continued.
For small business owners, Marks advised exploring a 401(k) employer match when filing their corporate taxes.
“Particularly in these times of tight labor, the more you match for your employees’ 401(k), the better it is for retaining employees and even attracting new employees,” Marks pointed out. “I’d rather give that money to my employees than give it to the government because it’s a tax deduction, and you have until when you file your taxes this year to make that match for 2022.”
Another “big issue” facing business owners? Bonus depreciation, the CPA added.
“If you’re a small business right now and you buy a capital item like computers or furniture or equipment for your business, up until this year, you were able to take a full deduction for it as long as you put it into service. But now this year,” Marks cautioned, “you’re only able to deduct 80% of that cost, and next year it goes down to 60% and then it goes down to 40%.”
“To take full advantage of this,” he said, “you buy capital equipment now, buy it in 2023, so you can take that bigger deduction this year before it starts to go down after.”
The 2023 tax filing season is reportedly the first to put to use IRS funding from the Inflation Reduction Act.
“We’ve trained thousands of new employees to answer phones and help people. While much work remains after several difficult years, we expect people to experience improvements this tax season,” acting IRS Commissioner Doug O’Donnell said in a statement.
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FOX Business’ Megan Henney contributed to this report.
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