Year-end Tax Ideas for Corporate Executives

The Easy Stuff:

👉 Check your most recent paycheck soon to ensure you’re set to max out:
✔️ Health FSA contributions. 2022 limit is $2,850
✔️ Dependent Care FSA. 2022 limit is $5,000 (depending on tax filing status)
✔️ HSA contributions. 2022 limits are $3,650 for individual coverage, $7,300 for families. If you’re 55 or older, you’re also allowed a $1,000 catch-up contribution. If you have disposable income and are covered by a high-deductible health plan, MAX YOUR HSA CONTRIBUTION.
✔️ 401k contributions. 2022 max is $20,500. If you turned 50 this year, don’t forget your catch-up contribution of $6,500 for 2022 + make sure you’re set to include the catch-up in future years.

While you’re looking at that paycheck: If you’ve moved, make sure your employer is withholding the CORRECT state income tax. I see this missed occasionally and can mean penalties and cash flow timing issues when you file your tax return next year.

More work involved:

👉 Making estimated tax payments? Consider making or NOT making a Q4 payment by mid-January depending on cash flow and how underwithheld you’ll be from bonuses, equity comp, etc. Run a year-end tax projection to back into balances due in April and whether to prepay.

👉 Holding more employer stock than you’d like?
✔️ If you have unrealized losses, this could be a good time to take the L & put the cash into diversified investments.
✔️ If instead, share price is up significantly from your tax basis, consider donating the stock to a charity - either directly or indirectly via a donor-advised fund, charitable trust, etc.
✔️ Any strategy with concentrated stock positions can get complicated quickly. Work closely with your financial planner & tax advisor.

👉Shifting wealth to the next generation? Make any annual exclusion gifts by 12/31/22. To avoid gift tax filing/payment requirements, the 2022 max per recipient is $16,000.

Bonus Idea: ✨

Spending time with family & friends during the holidays? Take notes! But seriously, take notes for updating your estate plan in the new year. E.g., the sibling you’ve named your 401k beneficiary started a high-paying job, so maybe you update your beneficiary designation to be a charity. More money💰to charity, less high-taxed income ❌ to a family member who may not need it.