Your Tax Returns Are Filed. Now What?

Two women smiling as they work at a counter on their laptops.

Congratulations! Your tax returns are filed for the 2022 tax year!

You might be tempted to wait until the end of 2023 to think about taxes again, but we recommend that you start thinking about the positive steps you can take now to reduce your 2023 tax bill. (And improve your financial comfort in retirement.)

If you are still working: Increasing contributions to your 401(k) retirement plan at work is a no-brainer.  Unfortunately, increasing your 401(k) contributions will reduce your take-home pay. And depending on your situation, that can hurt. However, a painless alternative is to time your contribution increase so that it’s attached to a pay raise.

You can decide on a certain percentage out of your next pay raise that you will contribute to your 401(k) plan. For example, 15% of your salary is a good target amount to save for retirement. When you receive your next pay raise, log in to your HR portal or complete the 401(k) paper contribution form so that 15% of your raise will be redirected to your 401(k) retirement plan. Your take-home pay will still be greater than it was before your raise so you shouldn’t even miss that 15%.

Try to keep bumping up your 401(k) contributions every year until you are maxed out. For 2023, the maximum retirement contribution is $22,500 for individuals under age 50.

Why contribute to a 401(k) instead of buying a new car? The compounding growth of your retirement savings is immense. For example, if you contribute $2,000 annually starting at age 30, even at a 6% rate of return that yearly $2,000 would grow into over $300,000 by age 65. Imagine what you could do with an extra $300,000 in retirement! The more money you save for retirement now means the more money you will have available to enjoy during your retirement. It might even allow you to retire sooner than you had planned!

If you are still working and are age 50 or older: Start researching and meeting with financial advisors to determine what you will need to cover your retirement living expenses, and what you will need to fund your bucket list. Use those numbers to determine whether your current 401(k) contributions are sufficient or need to be increased.

For those over age 50, there is an annual catch-up contribution of $7,500 allowed in addition to the maximum $22,500 regular 401(k) contribution for 2023, which brings your allowed contribution to $30,000 a year. Even if you’re starting late, making some sacrifices now can help you be more financially secure in retirement.

Another retirement savings option is to contribute to a health savings account (HSA) – which, like a 401(k) contribution, is paid with pre-tax dollars and reduces your current tax bill.

The HSA contribution limits for 2023 are $3,850 for self-only coverage and $7,750 for family coverage, with a catch-up contribution of $1,000 for those 55 and older. Once you turn 65, your HSA savings work like an IRA account and your money can be withdrawn to pay for either medical or nonmedical expenses.

Find out more and if you qualify for an HSA at:

Another consideration is whether you will want to have long-term care coverage. Check with your HR manager if your work offers this optional insurance benefit, as many plans allow you when you retire to continue paying those long-term care premiums at the same low group rate instead of the much higher individual rates.

If you are retired: Consider using charitable contributions to eliminate paying tax on the required minimum distribution (RMD) from your traditional IRA account. The IRS calls this contribution a “qualified charitable distribution” or QCD. Requirements include:

  • Must be at least age 72.
  • exceed $100,000 annually.
  • The financial institution must make the payment directly to the U.S. charitable organization. If you withdraw the IRA money first and then donate it, that will not qualify as a QCD and you will be taxed on that distribution.

Search the IRS list of eligible charitable organizations at

Another planning point to think about is the current historically low tax rates established by the 2018 Tax Cuts & Jobs Act, which are set to expire in two years. Combined with the stock market decline, you might want to consider converting some of your traditional IRA into a Roth IRA. This will require you to pay the tax on the amount of securities you sell to make the conversion. However, securities within a Roth IRA grow tax-free and are not subject to annual required minimum distributions.

Finally, to improve happiness during your retirement years, seek out ways large and small to enjoy your retirement and be grateful for what you do have. One best practice is to every morning or evening write down three things you are grateful for. Along with gratitude, mental health experts say that everyone needs to have a purpose in life … find yours!

Questions? Need fine-tuning? Unsure about when to start collecting Social Security benefits? Call us for a tax-planning / retirement-planning appointment today.

* This article is not a complete listing of all the details related to this business / accounting topic and you should contact your CPA for a more detailed discussion regarding these items and how they may apply to your specific situation.

Photo credit: Emma Dau,