November 7, 2023  |  3 MIN READ

Your 2023 Tax Planning

Why put off until tomorrow what can save you money today? To help you better understand where to begin with tax planning, Citi Personal Wealth Management has outlined areas to consider when starting to think about how to confidently grow and protect your wealth in 2023 and beyond.

Prepare for your 2023 taxes today:

Check Your Tax Withholding
Use the IRS Withholding Calculator to evaluate whether your employer is withholding too little or too much in taxes. Visit

Check Your Tax Withholding
Use the IRS Withholding Calculator to evaluate whether your employer is withholding too little or too much in taxes. Visit

Check investments by year-end
By selling investments at a loss, you can offset any realized gains and up to $3,000 of ordinary income if your filing status is single or married filing jointly or $1,500 if married filing separately. Any unused capital losses can be carried forward to offset future capital gains.

Jump-start education savings
Check with your tax advisor to see if you’re eligible for state income tax deductions on your resident state sponsored 529 plan, where you can save on a tax-deferred basis and withdraw tax free to pay qualified expenses for college and K-12. (Please note: Some states have not adopted the federal law allowing the use of a 529 plan for K-12 expenses.)

Avoid tax penalties
Pay your federal estimated tax installments on time to avoid tax penalties. You may wish to consider running through safe harbor tests with your tax advisor to avoid underpayment penalties (e.g., ensure you’ve paid at least 90% of tax owed for the tax year, or owe less than $1,000 in tax).

Take everyday steps toward retirement
Save more for retirement on a tax-deferred basis and reduce your taxable income by increasing your pretax contributions to employer retirement plan(s), such as 401(k)s and 403(b)s, with limits in 2023 at $22,500, and if you are over 50, an additional $7,500. If you have self-employment income, there are more options available. To learn about the Roth 401(k), please contact your tax advisor. To receive a comparison about Roth and Traditional IRAs, contact your Wealth Advisor.

Set up your estate today
Reduce the size of your taxable estate by making annual gifts, up to $17,000 (annual gift tax exclusion as of 2023) to as many beneficiaries as you want. If married and both spouses are U.S. citizens, you can jointly gift $34,000 per recipient.

Plan for tomorrow:

Continue to grow your retirement savings
The initial required minimum distribution for a traditional IRA must be taken by April 1 of the year following the year you turn 73 and be taken by December 31 each year thereafter. But, you do not need to take annual distributions from Roth IRAs. Consider converting a traditional IRA or retirement plan to a Roth, but you should consult with your tax advisor first about the potential tax consequences of a conversion. Keep in mind that you can no longer recharacterize a Roth IRA conversion made on or after January 1, 2018.

Keep your estate plan up-to-date
The 2023 federal estate tax exemption of $12.92 million for an individual could change dramatically in the future. Take the time to re-examine your existing estate plan, including wills, power of attorney, revocable trusts, and insurance plans alongside your legal and/or tax advisor before making any hasty moves.

Give generously
Because the limit on the deduction for cash gifts to public charities is generally 60% of adjusted gross income, consider charitable strategies for larger gifts. You may also consider pooling smaller gifts to overcome the expanded standard deduction amount.

Maximize your business benefits
The Tax Cuts and Jobs Act instituted a single income tax rate of 21% for C-Corporations. In addition, any dividend distributions of earnings and profits are also taxed to the shareholders at a rate as high as 23.8%. In other words, the income can be taxed twice. However, business owners of pass-through entities may qualify for a 20% “off-the-top” deduction on qualified flow-through income. Consequently, because LLCs are pass-through entities and the income from the business is only taxed once, they may be more tax efficient than C corporations. With the various changes in business income taxation, a key question to ask your legal and tax advisors is whether you need to make changes to your entity structure.

Remember: Get tax advice on your particular situation from an independent tax advisor. Please read the “Important Information” section at the bottom of this page.