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Annual Financial To-Do List BY DAVE RAO A S THE YE AR WINDS DOWN, CONSIDER YOUR FINANCIAL FUTURE. THIS IS AN excellent time to think about investing, saving or budgeting toward specific objectives, from building your retirement fund to managing your taxes. Can you contribute more to your retirement plans this year? In 2022, the contribution limit for a Roth or tra- ditional individual retirement account (IRA) is expected to remain at $6,000 — or $7,000 for those making "catch-up" con- tributions. Your modified adjusted gross income may affect how much you can put into a Roth IR A. With a traditional IR A, you can contribute if you (or your spouse, if filing jointly) have taxable compensa- tion, but income limits are one factor in determining whether the contribution is tax-deductible. 1 Once you reach age 72, you must begin taking required minimum distributions from a traditional IR A in most circum- stances. Withdrawals from traditional IR As are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Make a charitable gift. You can claim the deduction on your tax return, provided you follow the Internal Review Service guidelines and itemize your deductions with Schedule A . The paper trail can be important here. If you give cash, you should consider documenting it. Some contributions can be demonstrated by a bank record, payroll deduction record, credit card statement, or written commu- nication from the charity with the date and amount. Incidentally, the IRS does not equate a pledge with a donation. If you pledge $2,000 to a charity this year but only end up gifting $500, you can only deduct $500. 2 See if you can take a home office deduction for your small business. Using your home off ice as a business expense involves a complex set of tax rules and regulations. Before moving forward, consider working with a professional who is familiar with the tax rules as they relate to home-based businesses. 3 Open a n HSA . A Hea lt h Sav ings Account (HSA) works a bit like your workplace retirement account. There are also some HSA rules and limitations to consider. You are limited to a $3,650 contribution for 2022 if you are single or $7,300 if you have a spouse or family. Those limits jump by a $1,000 "catch-up" limit for each person in the household over age 55. 4 If you spend you r HS A f u nd s for nonmedical expenses before age 65, you may be required to pay ordinary income tax plus a 20% penalty. After age 65, you may be required to pay ordinary income taxes on HSA funds used for nonmedical expenses. HSA contributions are exempt from federal income tax; however, they are not exempt from state taxes in cer- tain states. Review your withholding status. Should it be adjusted due to any of the following factors? + You often pay the federal or state gov- ernment at the end of each year. + You of ten get a federa l ta x ref und each year. + You recently married or divorced. + You have a new job, and your earnings have been adjusted. Did you get married in 2021? If so, review the beneficiaries of your retirement accounts and other assets. The same goes for your insurance coverage. If you will have a new last name in 2022, you may want to get a new Social Security card. Additionally, retirement accounts may need to be revised or adjusted. Are you coming home from active duty? If so, check on the status of your credit and any tax and legal proceedings t hat might have been preempted by your orders. Consider the ta x impact of any upcoming transactions. Are you pre- paring to sell any real estate? Are you starting a business? Might any commis- sions or bonuses come your way? Do you anticipate selling an investment that is held outside of a tax-deferred account? If you are retired and in your seven- ties, remember your RMDs, or Required Minimum Distributions from retirement accounts. Usually, once you reach age 72, you must begin taking RMDs from most of these accounts. 5 Vow to focus on your overall health and practice sound financial habits in 2022. And don't be afraid to ask for help from professionals who understand your individual situation. ■ Dave B. Rao is the founder of R AO Wealth Partners. He focuses his practice on helping to advise physicians, corporate executives and business owners on their unique financial situations. For more info, visit raowp.com. Citations 1. thefinancebuff.com, Aug. 11, 2021 2. irs.gov, Jan. 22, 2021 3. nerdwallet.com, July 31, 2020 4. irs.gov, Sept. 8, 2021 5. irs.gov, May 3, 2021 Our firm does not render legal or tax advice. This article was written for our firm and provided courtesy of MarketingPro. Investments in securities and insurance products are NOT FDIC-INSURED/NOT-BANK GUAR ANTEED/MAY LOSE VALUE. Securities and advisory services offered through Nations Financial Group, Inc. (NFGI), member FINR A/SIPC, a Registered Investment Adviser. 4000 River Ridge Dr. NE, Cedar Rapids, IA, 52402. Dave Rao is a Registered Representative of NFGI. Rao Wealth Partners is an independent firm and not affiliated with NFGI. First Clearing carries your account and acts as your custodian for funds and securities deposited directly by you, through NFGI, or as a result of transactions it processes for your account. First Clearing is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. 1 6❱❱❱❱❱ F I N A N C I A L C H E C K U P

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