“Another commonly overlooked way to lower taxes is to be sure you are maximizing deductions that you’re allowed,” added Jason Field, CFP and financial advisor at Van Leeuwen & Company in Princeton, N.J. “A year-over-year comparison on your return is helpful to make sure you didn’t forget anything that was accounted for in previous years.”
Any distribution by an estate or trust within the first 65 days of the tax year can be treated as having been made on the last day of the preceding tax year, with a deadline of March 6, FitzPatrick said. “Estates and trusts are taxed at graduated rates and the top rate of 37% starts at a lower threshold than individual tax rates. ... Income may be distributed to a beneficiary from the estate or trust and the beneficiary will then pay any income taxes associated with the distribution according to the individual rates.”
Though not a deduction, another tax consideration for families with children who are working is the children’s Roth IRAs. “Most likely these children will be in the 0% income tax bracket. They can put up to the lesser of $6,000 or the child’s earned income into their Roth IRA by April 18,” Pon said. “I’d consider this for children who are recent graduates since they may make less than the Roth IRA income limit of $140,000.”
The best time to trim a year’s tax bill, of course, is during the current tax year. “Now is a great time to take proactive steps in reducing taxpayers’ tax liability for 2022,” Murray said.