Tax Considerations as We Approach the Second Half of 2023

Written By: Alex Hammersley, Financial Advisor

We will soon be halfway through the year 2023? Personally, this is hard to believe. It seems like just yesterday we were collecting our tax information to get our 2022 tax returns done and we were doing our best to stay warm in the chilly Midwest winter weather. With half a year under our belt, we should start thinking about several tax-related items to consider before the end of the year.

Required Minimum Distributions (RMDs): If you have been taking RMDs, you must take them out by the end of the year. If you started taking RMDs this year, you have until April 1st of 2024 to take your first RMD. 

Qualified Charitable Distributions (QCDs): If you give to a qualified charity, and are over the age of 70 ½, you should consider doing a QCD by the end of the year. The QCD allows you to take money from a tax-deferred account to send to a qualified charity. The amount you contribute will not be taxable and will count towards your RMD for 2023.

Roth Conversions: Should you do Roth conversions to fill up your current tax bracket? For example, if your income puts you in the 12% bracket, you might want to consider filling up the 12% bracket all the way to the maximum income number. Converting your tax-deferred money now at 12% would feel much better than paying tax later at 15% or more! Tax rates will automatically increase starting in 2026 due to the expiration of the Tax Cuts and Jobs Act. There are certainly other factors to consider, so we would love to walk you through those.

Say What?

A man in Finland was fined €121,000 ($130,000 USD) for going about 20mph over the speed limit. Finland uses the “day fine” system, meaning half of the offender’s daily income is multiplied by a certain number of days based on the severity of the offense. In this case, the man caught speeding is the founder of a multimillion-dollar company and is one of Finland’s richest people. Could it happen here in the U.S.? A bill was introduced before the New York City Council last month to make parking fines proportional to income to address the ”affordability crisis” in the Big Apple.

This week in history

1951 – The first commercial color television show was transmitted by CBS. But it was virtually unwatched since most people had only black and white TVs at the time. About 40,000 people saw the first color program.

1975 – The summer blockbuster movie Jaws is released about a great white shark attacking swimmers at Amity Island, a fictional summer resort town. It was the highest-grossing film in movie history until the release of Star Wars in 1977.

1989 – The movie Batman opened in theaters, starring Michael Keaton and Jack Nicholson. It grossed $100 million in its first ten days of release.

2003 (20 years ago) – Registration begins for the Do Not Call List with nearly 3/4 million phone numbers registered on the first day providing consumers with an opportunity to limit telemarketing calls.

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