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4 time-saving tax management tips

Steps to help improve your financial position.

Key takeaways

  • Tax management doesn't have to take a lot of time.
  • Improve your tax situation by maximizing pretax contributions where possible.
  • When tax planning, review your financial plan to help ensure that you're on track to meet your goals.

We get it. Time commitment and inconvenience can make managing your tax situation overwhelming. We're here to help with four, 10-minute tax management steps you can take to put you in a better financial situation for the 2023 tax year and beyond.

1. Maximize retirement plan contributions.

Participants can contribute up to $22,500 annually to 401(k) and 403(b) plans in 2023. If you intend to contribute the max, you will want to plan your contributions over the year to ensure you reach this limit by December, because you can't contribute retroactively like with an IRA. If you will reach age 50 or older in 2023, you can contribute an additional $7,500. Maxing out your contributions gives you the potential to increase your retirement savings as well as lower your current income taxes.

2. Maximize health savings account contributions.

If you have a high-deductible health plan (HDHP), you can contribute $7,750 (family) or $3,850 (individual) to your health savings account (HSA). For eligible after-tax contributions, you can take a corresponding deduction on your tax return. Contributions, earnings, and withdrawals are tax free for federal tax1 purposes when used to pay for qualified medical expenses. Once you reach age 65, you can use your HSA for any reason without penalty—just pay normal income taxes on any money used for a nonqualified medical expense.2

3. Get a better handle on your equity compensation.

If equity compensation is available to you, are you receiving more grants this year? If you have equity compensation, are older grants vesting or expiring? If appropriate for your situation, ask for an equity compensation analysis from your Fidelity Executive Services team. Your Executive Planning Consultant or Benefits Planning Consultant can review the report with you, discuss tax considerations, and identify ways to incorporate your equity compensation into your broader financial picture.

4. Consider a donor-advised fund.

A donor-advised fund (DAF) allows you to give irrevocable contributions to charitable organizations you care about through a charitable investment account. When you contribute cash, securities, or other assets to a DAF at a public charity, such as Fidelity Charitable®, you are generally eligible to take an immediate tax deduction. Then those funds can be invested for tax-free growth, and you can recommend grants to virtually any IRS-qualified public charity. DAFs provide an opportunity to use highly appreciated securities, instead of cash, to fund your charitable goals.

Tackling the above steps that are appropriate for your financial situation can be a great start to better managing your taxes. If you have 15 more minutes, it’s always smart to review your financial plan to determine if you’re on track to meet your goals and what actions you can take to improve your overall financial situation.

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More to explore

1. State tax may apply. See your tax advisor for more information on the state tax implications of HSAs. 2. Under age 65, distributions used to pay for nonqualified medical expenses are considered taxable income and may be subject to a 20% penalty

Investing involves risk, including risk of loss.

Fidelity Executive ServicesSM does not provide tax or legal advice.

This article is provided solely for the purpose of enhancing knowledge on tax matters. It does not provide tax advice to any taxpayer because it does not take into account any specific taxpayer's facts and circumstances. Tax laws and regulations are complex and subject to change, which can materially impact investment results. This article is for educational purposes only and is not intended, and should not be relied upon, as accounting advice.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

Fidelity Charitable® is the brand name for Fidelity Investments® Charitable Gift Fund, an independent public charity with a donor-advised fund program. Various Fidelity companies provide services to Fidelity Charitable. The Fidelity Charitable name and logo and Fidelity are registered service marks of FMR LLC, used by Fidelity Charitable under license.

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