LABJ Stock Index: March 27

Actions to Consider for Your Tax Returns

While taxes are inevitable, what you may owe might not be. We suggest you meet with your tax advisors as soon as possible to finalize your 2022 returns—and plan for 2023. 

Often, your tax bill depends on a number of fluid factors, including: where you live, how old you are, what (and to whom) you give, and whether you can (and do) benefit from available tax breaks.

With that in mind, here are four actions to consider as you file your 2022 returns and look to maximize your returns for 2023. 

1. Contribute to IRAs. With a traditional IRA, you can contribute up to $6,000, or — if you were 50 years or older in 2022 — up to $7,000 of your earned income. 

2. Seek a “SALT refund” for your pass-throughs. The Internal Revenue Service issued a notice late in 2020 stating that it intends to issue regulations saying pass-through entities (e.g., partnerships and S corporations) are exempt from the $10,000 deductibility cap on state and local taxes (SALT) at the entity level. 

3. Invest in a Qualified Opportunity Zone Fund (QOF) to defer realized gains. Have you directly (or indirectly, through a pass-through entity such as a partnership) realized short- or long-term gains during the last few months of the year on the sale of an asset? If so, you may have 180 days from the date of that realization (as determined under special QOF rules) to invest those gains in a QOF and defer (perhaps for several years) payment of taxes that would otherwise be due.

4. Make timely distributions from your private foundation. The general rule is that, to avoid penalties, private nonoperating foundations must distribute at least 5% of their assets at least annually to public charities. But if needed, you may have as many as 12 additional months to make distributions, as there is, in effect, a 12-month grace period.

With a traditional IRA, you can contribute up to $6,000, or — if you were 50 years or older in 2022 — up to $7,000 of your earned income.

Rick Barragan is the Managing Director, Los Angeles Market Manager, for J.P. Morgan Private Bank.
[email protected] | (310) 860-3658
privatebank.jpmorgan.com/los-angeles