Tax Considerations

Four Ways to Help Your Clients Lower Their 2023 Taxes 

There’s still time to make contributions to certain types of accounts to help maximize your clients’ tax savings in 2023.

The 2023 tax filing deadline is quickly approaching, and financial advisors have an opportunity to help clients maximize their tax savings. Although most tax-related activity had to be completed by year-end, there are still a few ways your clients can reduce their taxable income for 2023.

These “above the line” deductions are allowed regardless of whether your clients use the standard deduction or itemize deductions but must be made by the tax filing deadline on April 15, 2024.

IRA contribution

Your clients can still make a $6,5001 contribution ($7,500 if age 50 or older) to their IRA for the 2023 tax year. And depending on their income and if they (or their spouse) are covered by a retirement plan at work, they may also be able to deduct some or all of the amount of their contribution.

Spousal IRA contribution

For clients who file a joint income tax return, if one of the spouses doesn’t earn income or has very little compensation, they can fund their own IRA up to the contribution limit based on the working spouse’s compensation. While the combined IRA contributions can’t exceed their combined income, this could potentially double the amount of their deduction depending on the income limits for traditional IRA deductibility.

Tax year 2023 income limits for traditional IRA deductibility
Filing status* Covered by retirement plan at work Deductibility based on adjusted gross income
Single/Head of household No Full
Yes Full: $73,000 or less
  Phased out: > $73,000 to <$83,000
Married filing jointly Neither spouse Full
One spouse (without retirement plan at work) Full: $218,000 or less
  Phased out: >$218,000 to <$228,000
Other spouse (with retirement plan at work) Full: $116,000 or less
  Phased out: >$116,000 to <$136,000

* Consult IRS rules or a tax professional if your status is married filing separately or qualifying widow(er).

SEP-IRA contributions

Talk to your small business owner and self-employed clients about considering a simplified employee pension (SEP) plan to save for retirement. The contribution limits are quite generous at 25% of compensation (up to $66,000) for tax year 2023, and the contributions are tax-deductible for the employer. 

HSA contribution

Clients who participated in a high-deductible health plan (HDHP) can still make contributions to a health savings account (HSA) for tax year 2023–up to $3,850 for individuals or $7,750 for family coverage (and an additional $1,000 for those 55 and older). HSAs can be used to cover immediate, out-of-pocket health care costs, but they are also a good way to invest for the long-term, providing fully tax-deductible contributions, tax-deferred growth, and tax-free qualified distributions to offset future health care expenses in retirement.

You can play a key role in helping your clients take advantage of the available tax deductions before the upcoming tax filing deadline on April 15, 2024. Educating your clients about these opportunities can enable them to reduce their tax burden, thereby helping to meet their financial goals and improving their overall financial wellbeing.


How to Save Yourself Money by Lowering Your 2023 Taxes

Share the insights with your clients to educate them on the opportunities available to maximize their tax savings.

An IRA should be considered a long-term investment. IRAs generally have expenses and account fees, which may impact the value of the account. Nonqualified withdrawals may be subject to taxes and penalties. Maximum contributions are subject to eligibility requirements. For more detailed information about taxes, consult IRS Publication 590 or a tax professional regarding personal circumstances.


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