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Don't Leave Money on the Table. Tell Your CPA About These Transactions. Thumbnail

Don't Leave Money on the Table. Tell Your CPA About These Transactions.

"Tax Day" — the filing deadline to submit 2022 tax returns or an extension to file and pay tax owed — is coming up. This year its Tuesday, April 18, 2023, for most individual taxpayers.

As you are gathering information for your CPA or tax preparer, it’s time to think about a few items that may get lost in the shuffle. These are transactions that CPAs may not ask you about and you may not receive a related tax document to send along. So unless you speak up, you may be missing out on deductions. Leaving money on the table. Let’s go through them…

For the 2022 tax year did you:

Contribute to a 529 Plan?

Several states offer tax benefits for contributing to these college savings plans. For Illinois taxpayers, contributions to the Illinois Bright Start plan are tax deductible up to $10,000 per year ($20,000 if married and filing jointly).

You may not receive a tax notice from the state confirming a contribution, so let your tax preparer know.

Make an IRA Contribution?

Your IRA custodian (firms like Schwab or Fidelity) documents IRA contributions on Form 5498. Generally, you'll receive Form 5498 in May, so you won't be able to send this form to your CPA prior to the April 15th deadline. So let your tax preparer know if you have made a contribution.

Make a Qualified Charitable Distribution (QCD)?

A QCD is a distribution from an IRA owned by an individual who is age 70½ or over that is paid directly to a qualified charity. The QCD is excluded from taxable income, while counting towards satisfying your required minimum distribution, as long as certain rules are met.

An IRA custodian is not required to report a QCD transaction on Form 1099-R. Instead, it may show up on your 1099-R as a regular, taxable distribution to the IRA owner. So be sure to let your CPA know – and include the receipt or confirmation from the charity.

Roll over your 401 (k) to an IRA?

This is not a taxable event and you should let your accountant know about the rollover.  

Hopefully your tax return preparation will go smoothly this year. As always, please consult your legal, tax or investment professional for advice on your particular situation.

David Rappaport, CFP®
David is the Co-Founder and Chief Investment Officer of Rappaport Reiches Capital Management. He acts as personal CFO to entrepreneurs and corporate executives, providing organization and clarity in their finances. Please connect with David below. He loves to talk about investing, financial planning, and Aspiritech, a non-profit hiring individuals on the autism spectrum.

The author does not intend to provide investment, legal or tax advice as these materials are for general educational purposes only. Please consult your legal, tax or investment professional for advice on your particular situation. This material is derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. It is not intended to be a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction. Investing involves risk including the possible loss of principal. Past performance does not guarantee future results. Please refer to RRCM’s Form ADV Part 2 for additional disclosures regarding RRCM and its practices.