And, believe it or not, the government is giving you a little extra time to do something very wise.
As you know, most activities that affect your 2022 taxes had to be completed in 2022. Income, expenses, deductions, charitable donations, etc for 2022 had to take place in 2022.
But there’s a contribution that the government gives you until tax time in 2023 to take advantage of.
It’s the contribution to your IRA - Individual Retirement Account.
For the 2022 tax year, both you and your spouse can contribute up to $6,000 to your IRA (or $7,000 if 50+).
And you still have time to make this contribution.
You can contribute to a Roth IRA (if your income qualifies) or a Traditional IRA.
A Roth IRA doesn’t save you on taxes in the short-term but it definitely does in the long-term. You make after-tax contributions now, but it grows tax free and you can withdraw tax free after age 59.5.
A Traditional IRA does save you on taxes in the short-term, but you have to pay taxes when you withdraw in the long-term. You make pre-tax contributions, it grows tax deferred, and then you pay tax when you withdraw after age 59.5 as ordinary income.
Both can be a great investment depending on if you want the tax savings now or later.
Your CPA or Financial Advisor can help you figure out which is best for you.
The key is to just max it out each year.
And the good news is, you still have time to max it out for 2022.
