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End-of-the-year tax hacks for 2022

Yahoo Money editor Janna Herron shares several tax tips heading into the end of 2022.

Video Transcript

- The end of the year is approaching, and there are a few moves you should consider making to get the most out of the benefits you could receive from tax season. Yahoo Finance's Jenna Herron. Joins us now with the details. Jenna.

JENNA HERRON: Hi Thank you for having me. Yeah. So, I mean, I think one of the big ones for our audience is, you know, given the stock market volatility-- is selling some of those investment losers before the year end, and you can use those capital losses to offset any capital gains. And then if you have more capital losses than you do gains, which might happen-- I'm talking to crypto investors, maybe-- up to $3,000 of those losses can be used to reduce other income.

And then if you have even more losses than that, you can carry those extra losses forward for future years. So that's one great way to capitalize on what may not have been a great year for your investments. The other thing I like to do, and this is for people-- even if they don't itemize, is contribute to your traditional IRA or to a health savings account, and those contributions can be tax-deductible. For traditional IRAs, it depends on a few factors.

But these are really great contributions. There's caps to them, so you do have to watch out for that. But there are three things I really love about these moves. First, you don't need to itemize your taxes. So anybody who takes a standard deduction can use this. Two, they help with your retirement savings. We all know people who haven't saved enough, well, this will get you further. And three, these contributions can actually be made until tax day next year.

So you don't have to do it the end of the year. You can wait until April 18. That's when tax day is for next year. For those who itemize their taxes-- that's not as many Americans-- there are a few things you can do. First of all, you can get the most out of your state and local deduction by prepaying your 2023 property tax bill. So next year's tax bill, before the end of the year. And then you can-- if your state allows it. And then you can use that for your state and local tax deduction.

Another homeowner tip here is you can pay your January mortgage payment before the end of the year. Then that can help maximize the mortgage interest deduction that you can take. And then, of course, tomorrow is Giving Tuesday, and so contributions, charitable contributions, make those for 2022. And if you plan to make them for 2023 and you want to double up to help take a bigger deduction, go ahead and do that.

- And you talked about people that do itemize. As so many do not, what's the most common mistake-- look, a lot of people just say, it's not worth the headache to me. What are the most common misses that people should itemize that should take a little bit of extra time?

JENNA HERRON: Well, it depends on how complicated your taxes are. Usually, the more complicated your taxes are, more likely you need to itemize. If you have a lot of capital gains, capital losses, if you have other kind of income, if you have business expenses, things like that, that's when you want to start itemizing. Also, if you had a huge health event and you have a lot of unreimbursed medical expenses, if those exceed 7.5% of your adjusted gross income, then you can deduct those costs. So that's something to add up, and that's only for itemizers.

- All right, we gotta leave it there. Itemizing is never fun. I try to keep it as simple as possible. Don't even own a house, but we'll see how it works out next year for me.