October 2, 2022

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Top CPAs Share the 7 Best Ways to Reduce Your Tax Bill Next Year

Anyone, Judge Learned Hand once wrote, may so arrange his affairs that his taxes shall be as low as possible. But how might you go about doing that, especially as you think about your 2022 tax return?

Here, according to tax experts, are some strategies and tactics to consider:

1. Roth IRA Conversion

Distributing some or all of the money in your traditional IRA into a Roth IRA will increase your tax burden in the short term. That’s because the distribution will be taxed as ordinary income. But doing full or partial Roth IRA conversions in 2022 might lower your overall burden over the course of your retirement.

What’s more, given that the Standard & Poor’s 500 index was down 21% as of this writing, now is a good time to do a Roth IRA conversion, according to Ted Sarenski, a wealth manager (CPA, CFP, PFS, and AEP) at Sage View Advisory. The reason? One would have a lower tax bill now than had one done a Roth IRA conversion when the market was trading at all-time highs.