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Your 2022 Year-End Planning Checklist

It may be easy to forget we're nearing the end of the year. Even during the busy end of year rush, it's a good time to reevaluate your 2022 finances and turn an eye toward 2023. What can you do now to potentially improve and streamline your 2023 budget? Below, we discuss three year-end planning steps that may make your 2023 finances run more smoothly.

Sketch Out Your 2022 Taxes

Taxpayers should be aware that legislation to extend the increased Child Tax Credit was not passed, therefore, it has reverted back to a $2,000 credit per dependent under age 17 with no advanced monthly checks. While this tax credit may be a boon to household budgets in some cases, it's not "free" money and, with this credit also reverting back to being partially refundable, it could increase your tax liability (or reduce your refund).

This, along with some other tax changes in 2022, make it important to do a quick sketch of your tax liability to make sure your withholdings or estimated payments remain on track. You may still make estimated payments to your 2022 taxes through January 17, 2023. If you've been under-withholding or earned more income than expected, you still have several months to reduce your April 2023 tax payment.

Evaluate Your Asset Allocation

Each investor has their own "model portfolio"—that is, the percentage of large-cap, mid-cap, small-cap, and international stocks, as well as bonds and cash instruments they want their portfolio to represent. Even the most model portfolio may shift over time as certain sectors gain value while others stagnate. If it's been a while since you looked at your asset allocation, the year-end review may be a great time to make sure your investments are still representative of your needs and goals.

Check Progress On Your Long-Term Goals

Whether your goals include saving for retirement, sending children to college, buying a new home, or stepping back from a stressful career into a lower-paying one, regular "goal checkups" to assess your progress are essential. By taking snapshots of your income, spending, investment balances, and net worth on a monthly or annual basis, you may get a better idea of how long it may take you to save up for certain goals or how much investment income you may be able to spare without tapping into your principal.

Your year-end review may also present a good time to set target goals for year-end 2023. Next year, you may have an even better point of reference to see how much progress you've made.

Important Disclosures

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Asset allocation does not ensure a profit or protect against a loss.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.


This article was prepared by WriterAccess.

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