Timely Tax Tips


Spring is just around the corner – which means so is the 2022 tax deadline.

It’s almost March, and that means we’re right in the thick of tax season. If you haven’t filed yet, there’s still time to take steps to help minimize your tax burden, maximize your refund, and help avoid potential penalties. I’ll talk about all that and more in today’s blog, Timely Tax Tips for 2022 and Beyond. I’ll cover: Things to expect when filing this year; basic tips that apply most every year; three evergreen tax tips for retirees and near-retirees; and how to help prepare for one of retirement’s biggest tax challenges.

First, let’s cover some things you should know and expect when filing this year. Number one, expect complications and delays – just like last year. The coronavirus pandemic disrupted operations at the IRS, as it did many businesses. That means if you’re expecting a refund, you might have to wait longer than usual for it. The IRS offers three tips to help avoid that possibility: One, file as early as you can. Two, file electronically. And three, choose to receive your refund by direct deposit. It’s also more important than ever this year to make sure you’re filing an accurate return. So, take some time to manually review all your forms before submitting them. The IRS also recommends making sure you know all the forms and documents you’ll need. In addition to your W-2, these might include: 1099 Forms for miscellaneous income. 1098 Forms for your mortgage interest statements. And letter 6475, which you’ll need if you received another stimulus payment last year. What about money earned on your investments? If you’re still investing for growth, short-term capital gains are taxed as ordinary income according to the 2022 federal tax brackets. And did you jump on the cryptocurrency bandwagon last year? If so, your Bitcoin, Ethereum, and other cryptocurrencies are also taxable.

Now, let’s cover some strategies that might help you save money next year, and every year.  Number one: Review your withholdings to make sure you’re not overpaying taxes throughout the year. Ultimately, that money could serve you better by being used to increase your 401(k) contributions. Which leads us to tip number two: Make sure you’re taking full advantage of your 401(k) by meeting your employer’s maximum contribution-match limit. It’s an easy way to double the money you’re saving for retirement and decrease the amount of your income that gets taxed. Number three: Itemize – if it works for you. Yes, it may make sense to take the standard deduction, but if you have a mortgage, state and local taxes, major medical bills, or self-employment expenses, you may have enough deductions to make itemizing worth your while. And finally, make sure you stay up to date on all the latest tax rules and guidelines. This becomes increasingly important as you approach and enter retirement.

Beyond that, here are a few other things that can help you – tax-wise – if you’re retired or getting close. First, know the benefits of tax diversification. Just as you can diversify your investments across different asset classes, you can also diversify across different types of taxation. It all starts with knowing the differences between various types of retirement savings accounts. They all differ in many ways, including by contribution limits and how contributions and withdrawals are taxed. For example, 401(k)s are funded with pre-tax contributions. Your money isn’t taxed when it goes into the account, but any withdrawals are taxed as ordinary income. Roth 401(k)s, on the other hand, are funded with after-tax dollars. That means your withdrawals are tax-free and penalty-free as long as you meet certain conditions. Similarly, traditional IRAs are pre-tax vehicles where your withdrawals are taxed as ordinary income, while Roth IRAs are funded with after-tax dollars. That leads us to tip number two: Understand and prepare properly for your required minimum distributions. Even if you don’t need to withdraw money from a traditional IRA, 401(k), or other qualified plan for income, once you reach a certain age the government makes you withdraw a minimum amount and pay taxes on it. Knowing how to satisfy your RMDs without putting your entire savings at risk is one of the most important elements of retirement planning. So now let’s talk about how to do it.

Without a doubt, RMDs can be complex and lead to unpleasant surprises when they’re not handled correctly. Surprises such as a big spike in your taxable income; an IRS penalty of 50 percent; or, worst of all, the depletion of your retirement savings. RMDs start at almost 4 percent of your IRA balance and increase each year as you get older. Once you’ve properly calculated your RMDs, the most important next step is to make sure you have the right asset allocation to satisfy them. In my experience, that means an allocation that can generate at least 4 percent dividend or interest. If you’re earning less than that, you may be at risk of cannibalizing your principal and – ultimately – running out of income. An advisor who specializes in retirement income can help you avoid that pitfall and make sure you’re well prepared for all the new tax challenges you’ll face in retirement!


Investment Advisory Services offered through Sound Income Strategies, LLC, an SEC Registered Investment Advisory Firm. Arbor Financial Services of Florida, Inc. and Sound Income Strategies, LLC are not associated entities. Arbor Financial Services of Florida, Inc. is a franchisee of the Retirement Income Store. The Retirement Income Store and Sound Income Strategies LLC are associated entities.




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Arbor Financial Services of Florida is a full-service financial firm dedicated to helping those in the Melbourne, FL area meet their long-term financial goals. Our team of financial advisors and wealth managers are experienced in helping clients preserve their savings, so they can use it as a source of steady income in retirement.

All written content on this site is for informational purposes only. Opinions expressed herein are solely those of Arbor Financial Services,  and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. Investing involves risk. There is always the potential of losing money when you invest in securities. Asset allocation, diversification and rebalancing do not ensure a profit or help protect against loss in declining markets. All information and ideas should be discussed in detail with your individual advisor prior to implementation. The presence of this website, and the material contained within, shall in no way be construed or interpreted as a solicitation or recommendation for the purchase or sale of any security or investment strategy. In addition, the presence of this website should not be interpreted as a solicitation for Investment Advisory Services to any residents of states where otherwise legally permitted to conduct business. Fee-based financial planning and Investment Advisory Services are offered by Sound Income Strategies, LLC, an SEC Registered Investment Advisory firm. Arbor Financial Services and Sound Income Strategies  are not associated entities. Arbor Financial Services is a franchisee of Retirement Income Source. Retirement Income Source and Sound Income Strategies are associated entities. © 2023 Arbor Financial Services

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