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Lesser-known ways to reduce your 2022 tax bill or boost your refund

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1. If your income is higher in 2022, you postpone your allowance to 2023

If you’ve had a strong year and expect lower earnings in 2023, you could try putting off a holiday allowance until the New Year, experts say.

“It’s always exciting to reap the rewards of hard work by getting a year-end bonus,” said Lisa Greene-Lewis, a CPA and tax expert at TurboTax. “But sometimes you can run into a different tax bracket because of that.”

However, if you receive the money in January, you can reduce income for 2022 without waiting too long for the money, assuming your company allows it, she said.

2. Prepay future healthcare costs before deductions

Applying for the health care deduction is not easy. For 2022, there is a tax break for unreimbursed medical expenses that exceed 7.5% of your adjusted gross income. But can only claim it if you specify deductions.

Typically, you state whether deductions — including charitable gifts, medical expenses, and more — exceed the standard deduction, which is $12,950 for single filers or $25,900 for married couples filing together before 2022.

While it’s difficult to plan for medical expenses, you’re more likely to maximize the deduction by “bundling expenses for two years into one,” explains certified financial planner Marguerita Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. .

For example, with several children in orthodontic braces, you can ask to prepay the remaining balance before the end of the year if you can afford it, she suggested. “The provider can also offer a discount to pay off everything earlier,” said Cheng, who is also a member of CNBC’s Financial Advisor Council.

Of course, you’ll first need to calculate your adjusted gross income, total itemized deductions, and your past medical expenses for 2022.

3. “Maximize your braces” with a partial Roth conversion

With the S&P 500 index down about 15% for 2022, you may see a Roth individual retirement account conversion, which transfers pre-tax funds into a Roth IRA for future tax-free growth. The trade-off is that you owe taxes upfront on the converted amount.

The strategy can pay off when the market falls because you can buy more shares for the same dollar amount, and there’s a chance of tax savings on the converted portion.

However, depending on your income level, you may also want to consider a partial annual conversion, experts say.

“The bottom line is if you are retiring or about to retire and your income is low, you want to consider supplementing enough to maximize your income,” says Thomas Scanlon, a CFP and CPA at Raymond James in Manchester , Connecticut.

For example, if you’re already in the 24% bracket, there may still be room for more income before you activate 32% on the excess amount, he said.

Scanlon said partial Roth conversions work well for “little-income, high-wealth” retirees, such as someone who leaves the workforce for several years before they have to start taking required minimum benefits.

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