CINCINNATI — With tax season right around the corner, experts say this is a good time to get ready for it.
Figuring out your tax bracket is the first step, according to Personal Financial Specialist Bill Hesch.
“If you’re trying to do tax planning and you’re trying to maximize your tax deductions—and that’s really important in the tax planning that we do,” said Hesch.
He also suggests considering the benefits of tax saving tools, such as a Health Savings Account (HSA). Your contributions to your HSA are tax free, reduce your taxable income, and withdrawals are tax free for qualified medical expenses, including co-pays, medical procedures, and prescriptions.
“You can take the money out and you don’t have to pay for the medical expenses,” he said. “You just have documentation that you paid over the years that amount of medical expenses and it’s tax free.”
Besides your HSA, he says your Individual Retirement Account, or IRA, will also help lessen your tax burden — as it can lower your taxable income.
“It accumulates tax-free when you take it out and you pay no tax on it,” he said. “So the Roth IRA is really a good tax shelter in that context, almost like the HSA.”
If you’re looking for even more tax deductions for 2022, he says a Donor Advised Fund allows you to put money into an account for future donations.
“You can put money into this fund and get a tax deduction for it and then you use that money over the next few years to make donations,” he said.
While these tips may be helpful, Hesch said it’s always best to consult a Certified Public Accountant (CPA) or tax adviser to make sure you find the best deductions.
“You work with a team of advisers; you work with your attorney; you work with your financial investment adviser; you work with your CPA to do your financial planning, your retirement planning and your tax planning,” he said.
