5 actions to consider for your 2022 tax bill

While taxes are inevitable, what you may owe might not be. We suggest you meet with your tax advisors as soon as possible to finalize your 2022 returns—and plan for 2023.

Often, your tax bill depends on a number of fluid factors, including: where you live, how old you are, what (and to whom) you give, and whether you can (and do) benefit from available tax breaks.

With that in mind, here are five actions to consider for your 2022 returns.

1. Contribute to IRAs – With a traditional IRA, you can contribute up to $6,000, or—if you were 50 years or older in 2022—up to $7,000 of your earned income.

2. Distribute trust income – Trustees and executors have until March 6, 2023, to distribute income to beneficiaries and have those distributions treated as if they were made in 2022.

3. Seek a “SALT refund” for your pass-throughs – The Internal Revenue Service issued a notice late in 2020 stating that it intends to issue regulations saying pass-through entities (e.g., partnerships and S corporations) are exempt from the $10,000 deductibility cap on state and local taxes (SALT) at the entity level.

4. Invest in a Qualified Opportunity Zone Fund (QOF) to defer realized gains – Have you directly (or indirectly, through a pass-through entity such as a partnership) realized short- or longterm gains during the last few months of the year on the sale of an asset? If so, you may have 180 days from the date of that realization (as determined under special QOF rules) to invest those gains in a QOF and defer (perhaps for several years) payment of taxes that would otherwise be due.

5. Make timely distributions from your private foundation – The general rule is that, to avoid penalties, private non-operating foundations must distribute at least 5% of their assets at least annually to public charities. But if needed, you may have as many as 12 additional months to make distributions, as there is, in effect, a 12month grace period.

Ethan Morgan Market Manager, J.P. Morgan Private Bank (949) 852-4300 ethan.morgan@jpmorgan.com www.jpmorgan.com/privatebank/orangecounty

Source: J.P. Morgan Private Bank Insights, March 20, 2023. “Key actions to consider before filing your U.S. tax return” By Amanda Lott, Head of Wealth Planning Strategy, Advice Lab, and Adam Ludman, Tax Advisory, Advice Lab, and Tom McGraw, Head of Tax Advisory, Advice Lab, and Jordan Sprechman, Practice Lead, U.S. Wealth Advisory, J.P. Morgan Private Bank.