Maxim Liberty Bookkeeping Services, LLC

What are the top 10 tax savings tips and tricks for 2023?

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Maxim Liberty

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  1. Contribute to an HSA.
    • HSA is probably the best tax advantaged scheme. With an HSA, contributions are pre-tax. In addition, the investments grow tax free and withdrawals for qualified medical expenses are tax free as well.
  2. If you are an employee, enroll in a 401k, 403b or similar plan
    • If you are less than 50 years old, the 2023 limit for 401k contributions is $22,500 up from 20,500 in 2022.
    • If you are more than 50 years old, the 2015 limit for 401k contributions is $30,000 up from $27,000 in 2022.
  3. If you are a small business, create a SEP IRA plan.
    • The contributions you make to each employee’s SEP-IRA in 2023 cannot exceed the lesser of: 25% of compensation or $66,000 for 2023 ($61,000 for 2022; $58,000 for 2021; $57,000 for 2020 and subject to annual cost-of-living adjustments for later years).
  4. If you have invested in the stock market, sell your money losing stock investments to lock in capital losses.
    • What is the maximum amount of capital losses you can deduct in one year? The IRS limits your net loss to $3,000 (for individuals and married filing jointly) or $1,500 (for married filing separately). Any unused capital losses are rolled over to future years. Locking in your losses allows you to deduct up to $3,000 in net losses every year. Of course, there is always the risk that the stock you sold may go up. However, there are many other stocks to pick from which may offer similar potential. Be wary of “wash sales” though. You cannot purchase a stock that is “substantially like” the one you sold within 30 days of the sale. You may buy it back after 30 days. If you’d rather carry the risk of more owning more stock than losing out on gains. You can double up the amount of stock you own and then sell the original money losing lot more than 30 days after the double up.
  5. Contribute to 529 savings.
    • 529s may qualify for state income tax deductions or credits. In addition, while the contributions are made with after-tax dollars, earnings are not taxed as long as you use them for qualified higher education expenses which may include tuition, boarding, etc.
  6. Outsource some of your operations like payroll, bookkeeping, SEO, call centers, etc. to cut down on payroll taxes and other overhead expenses.  Small businesses should especially consider outsourcing bookkeeping. Outsourcing bookkeeping can save you up to 90% of bookkeeping costs and get you better quality and more reliable bookkeeping.