Another consideration: advanced estate planning. “If you’re over the estate tax exemption [$12.06 million for an individual], this could be a good year to make gifts to irrevocable trusts,” Rogers said.
Regarding maxing out contributions to retirement plans, Goldberg noted that the effectiveness of this strategy is predicated on distributions from these plans occurring when the investor is, eventually, in a lower tax bracket. “This approach will depend on what the adjusted gross income is of the investor at that time and further assumes that marginal tax rates are relatively similar to current day,” he said.
Kadrlik also noted that the Inflation Reduction Act provided a number of incentives to purchase electric vehicles and solar and wind energy equipment for home and business. Experts have warned, however, that relatively few vehicles might qualify for the electric car credit.
“Deferring income, if possible, may help,” Armstrong added, “but be careful of constructive receipt [first day available] issues. If I paid you on Dec. 4 and you cash the check on Jan. 4, you’d better have a great reason why that check was not cashed in 2022.”