Think You Might Owe the IRS in April? 3 (Easy!) Ways to Lower Your Tax Bill

The Money with Katie Show

Money with Katie

Self-improvement, Education, Business, Investing, How To

4.8 • 1.3K Ratings

🗓️ 22 February 2023

⏱️ 18 minutes

🔗️ Recording | iTunes | RSS

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Summary

One of the trickiest things about investing in retirement accounts is that by the time you know how much you could’ve contributed for a tax break, it’s too late (e.g., you can only make 401(k) contributions through Dec. 31). But there are a few accounts in the tax-advantaged investing world that allow contributions right up until the tax deadline, making them incredible options for last-minute savings. After all, I prefer deductions that come from investing over deductions for spending: Why would I spend $100 to save $32 when I could invest (read: keep) $100 to save $32? Reminder: I’m not a licensed tax professional. Please consult your CPA and do your own research before making big money moves. Learn more about our sponsor, TaxAct: https://www.taxact.com/moneywithkatie Transcripts can be found at podcast.moneywithkatie.com. — Mentioned in the Episode The Traditional IRA: https://www.irs.gov/retirement-plans/ira-deduction-limits 3 Ways to Lower Your Tax Bill & Navigate Rollover IRA Forms: https://moneywithkatie.com/blog/3-ways-to-lower-tax-bill-rollover-ira-forms 2022 & 2023 IRA deduction limits: https://www.irs.gov/retirement-plans/2023-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-not-covered-by-a-retirement-plan-at-work The Roth IRA: https://www.irs.gov/retirement-plans/roth-iras Roth IRA Income Limitations: https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022 The Backdoor Roth IRA: https://www.youtube.com/watch?v=QTODFAUIBhY&ab_channel=MoneywithKatie The Money with Katie Show on building a diversified portfolio: https://youtu.be/qTkVMGi3dFg SEP IRA Contribution Limits: https://www.irs.gov/retirement-plans/plan-participant-employee/sep-contribution-limits-including-grandfathered-sarseps Self-employment tax: https://www.ssa.gov/pubs/EN-05-10022.pdf Solo 401(k) deadline: https://www.mysolo401k.net/solo-401k-faq-when-is-the-deadline-to-open-a-solo-401k-for-2022-and-make-2022-401k-contributions High-Deductible Health Plans (HDHP): https://www.irs.gov/publications/p969 HSA Contribution Limits for 2022: https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits Saving on FICA tax via the HSA: https://www.voya.com/voya-insights/importance-educating-employers-hsa-program-fica-savings — Follow Along at Money with Katie: https://moneywithkatie.com/ Watch on YouTube: https://www.youtube.com/@MoneywithKatie Follow Money with Katie! - Instagram: https://www.instagram.com/moneywithkatie/ - Twitter: https://twitter.com/moneywithkatie Subscribe to The Money with Katie Newsletter - Sign up for free today: https://www.morningbrew.com/money-with-katie/subscribe/2 Follow the Brew! - Instagram: https://www.instagram.com/morningbrew/ - Twitter: https://twitter.com/MorningBrew - TikTok: https://www.tiktok.com/@morningbrew Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	If you're afraid that you may be facing a tax bill this April, and you'd be in good
0:13.4	company, you may be eligible to try one or more of these easy ways to hang on to more
0:19.0	of your money and lower your tax bill in the process.
0:30.3	Welcome back to the Money with Katie Show Rich Girls and Boys. I'm your host, Katie Gatti,
0:34.7	Tassanne, and a little disclaimer before we begin today. I'm not a licensed tax professional,
0:40.4	this is not tax advice. Please consult your friendly neighborhood CPA and do your own research,
0:47.7	feel free to use this episode as an informational starting point about what options you may have
0:53.3	to lower your tax liability for 2022. Let's address the massive social services sized elephant
1:08.3	in the room before we jump into this. I believe paying your taxes is just part of being a good
1:13.7	citizen. Your tax dollars ideally fund things like infrastructure and public schools and public
1:19.8	transportation and in every other high income nation on earth, healthcare and childcare shade,
1:25.0	still beating the drum in the US. But I also believe that as long as the internal revenue code is a
1:30.5	zillion-page document full of jargon and loopholes exploited by the likes of Bezos and Gates and
1:36.9	hedge fund managers the world over, it is fully within the rights of the metaphoric plebe to play the
1:42.7	game in an informed way. So a few years ago, I owed around $40,000 to the IRS. I feel like I'm
1:49.9	living in the movie Groundhog Day right now, having a similar situation this year. But back then,
1:56.0	my business had taken off and I knew checks notes basically nothing about paying quarterly taxes.
2:02.3	So when the final bill came due, Uncle Sam was all, hey, uh, you remember me? And in a desperate
2:08.2	attempt to triage some of the bleeding, I used a few different methods for lowering my tax liability.
2:15.0	Depending on how you earn and your access to retirement accounts and certain healthcare
2:20.1	plans, it's possible that all three, or frankly none of these options will be viable for you,
2:25.0	but they all have one thing in common. They're all legal ways to hold on to more of your own
	...

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