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You must pay taxes as you receive income throughout the year via withholdings or quarterly estimated taxes.
Some retirees may avoid late payment penalties by withholding taxes from year-end required minimum distributions.

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If you’re retired and skipped your 2022 tax payments, you can still avoid late penalties with an under-the-radar year-end strategy, experts say.
Since taxes are due as you receive income, you must withhold levies from earnings or pay quarterly estimated tax payments. You may owe quarterly taxes if you didn’t withhold enough from Social Security, pensions or other income.

But if you missed paying quarterly taxes, you can correct that mistake through your year-end required minimum distribution, or RMD, which currently begins at age 72. RMDs may have already started if you turned 70½ before Jan. 1, 2020.
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With few chances for a do-over in the tax world, the withholding is a “good little wild card to go back and fix things,” said certified financial planner Marianela Collado, CEO of Tobias Financial Advisors in Plantation, Florida. She is also a certified public accountant.
For example, if you need to withdraw $75,000 from an individual retirement account by year-end to satisfy your RMD for 2022, you can estimate the year’s total federal and state tax liability and withhold the funds from your RMD. If you estimated you still owed $5,000 in taxes to meet quarterly estimated tax obligations, you could opt to withhold that amount, remit it to the IRS and receive the remaining $70,000 withdrawal.
“People don’t know this, but you could have a 100% withholding” by sending the entire RMD to the IRS, Collado said.

You can complete this by Dec. 31, and it’s considered “pro rata” for each quarter, meaning it counts as on-time payments made by each deadline, explained JoAnn May, a CFP and CPA who founded Forest Asset Management in Berwyn, Illinois. “That’s a nice thing that I do for a lot of my older clients,” she said.

How to avoid quarterly estimated tax penalties 

Typically, you can avoid federal penalties by paying, throughout the year, the lesser of 90% of your 2022 taxes or 100% of your 2021 bill if your adjusted gross income is $150,000 or less (110% if you made more than $150,000).
You can base payments on your income each quarter or check your 2021 return for last year’s tax liability and divide that number into four equal payments.
By paying at least these amounts by each of the deadlines, you won’t incur late payment penalties. The first three deadlines for quarterly estimated tax payments this year were April 18, June 15 and Sept. 15, and the fourth-quarter balance isn’t due until Jan. 17, 2023.
However, making payments based on last year’s liability isn’t a guarantee you won’t owe taxes for 2022. By working with a tax professional, it may be easier to gauge exactly how much to set aside before filing taxes in April. 

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The Treasury Department is delaying plans to issue proposed guidance for the sourcing of EV batteries for federal tax incentives under the Inflation Reduction Act from.  
The sourcing of materials and batteries for EVs is a major part of the federal tax credits of up to $7,500 for consumers under the act.
The change means that some EVs that are not expected to comply with the new standards will continue to be eligible for the credits.

UAW Local 5960 member Kimberly Fuhr inspects a Chevrolet Bolt EV during vehicle production on Thursday, May 6, 2021, at the General Motors Orion Assembly Plant in Orion Township, Michigan.
Steve Fecht for Chevrolet

The Treasury Department is delaying plans to issue proposed guidance for the sourcing of electric vehicle batteries for federal tax incentives from the end of this month to March.  
The sourcing of materials and batteries for EVs is a major part of the Inflation Reduction Act’s federal tax credits of up to $7,500 for consumers, which was signed into law by President Joe Biden in August.

That means some electric vehicles that are not expected to comply with the new standards will continue to be eligible for the credits until the proposed guidance issued. Other non-battery elements of the IRA will still take effect Jan. 1, including new income caps for eligible buyers and restrictions on vehicle pricing.
Some have argued the sourcing guidelines for vehicle materials are unrealistic given the current supply chain. Other countries and non-domestic automakers such as Hyundai have argued the rules should be defined more broadly to allow some exemptions.
The Treasury said late-Monday that it will issue the “anticipated direction of the critical mineral and battery component requirements” by the end of this month, and that nothing will take effect until the proposed guidance is issued in March.
The Inflation Reduction Act limits EV tax credits to vehicles assembled in North America and is intended to wean the U.S. off battery materials from China, which reportedly accounts for 70% of global supply of battery cells for the vehicles.
For a $3,750 critical minerals credit, the law states that 40% must be extracted or processed in the U.S. or in a country where the U.S. has a free-trade agreement, or from materials that were recycled in North America.

Credit for the other $3,750 requires that at least 50% of battery components were manufactured or assembled in North America. The percentage requirements for both rise annually to reduce reliance on foreign countries.
Starting Jan. 1, a tax credit will not be available to single individuals with a modified adjusted gross income of $150,000 or higher. The income cutoff is higher for others — $225,000 for heads of household and $300,000 for married couples who file a joint tax return.
Cars with a retail price of more than $55,000 also aren’t eligible, nor are vans, SUVs or trucks that cost $80,000 or more.

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The exterior of the U.S. Capitol is seen at sunset in Washington, U.S., December 13, 2022. 
Sarah Silbiger | Reuters

Sen. Marco Rubio, R-Fla., is vice chairman of the Senate Select Committee on Intelligence, and a member of the appropriations and foreign relations committees while Rep. Ro Khanna, D-Calif., is a member of the House oversight, agriculture and armed services committees. The lawmakers are co-sponsors of the National Development Strategy and Coordination Act.
For decades, the United States enjoyed the strongest and most innovative economy in the world, driving growth and delivering prosperity to millions of American workers and families. But we grew complacent. We off-shored our factories and allowed unfair trading practices from non-market economies, like China’s, to undermine our industries. Now, we’re waking up to the consequences — a lack of economic resilience due to overextended supply chains, serious and potentially long-lasting vulnerabilities in national security and the loss of good-paying jobs.

Our duty is clear. Unless we rebuild America’s productive capacity and invest in key industries, we will put our nation’s economic prosperity and very sovereignty at risk. The federal government has the financing tools to chart a new and better course, but they are scattered across several agencies with little coordination or strategic direction. That’s why we’ve joined forces to jumpstart a national project to restore American manufacturing leadership.
This is a shared purpose that can unify Americans. It is also work that can bring together elected officials from both sides of the aisle and bypass years of partisan gridlock in Washington — not an easy feat in a narrowly divided Congress.
What would our proposal entail? First, it would establish a new committee of cabinet-level agency heads, including the secretaries of Treasury, Defense, Commerce, Energy, and Agriculture, the director of the Small Business Administration and others. This committee would be charged with developing a National Development Strategy, recommending investments to improve national security, strengthen domestic manufacturing, create good-paying jobs and develop new technologies.
Second, our proposal — the National Development Strategy and Coordination Act — would give this committee the authority to direct the Department of Treasury’s Federal Financing Bank to achieve its goals. Under our legislation, the bank would receive $20 billion to identify, supplement, and “supercharge” loans made by other by other federal financing facilities, such as the SBA’s Small Business Innovation Company or the Department of Energy’s loan program. This would bring overdue strategic coordination to our federal loan system and inject much-needed long-term capital into critical industries.
This model isn’t new. George Washington and Alexander Hamilton used public investment to catapult the U.S. from backwater colonies to a country with a world-class, diversified economy. Franklin Roosevelt and Donald Nelson’s War Production Board helped America win World War II and become the greatest power in the world. Ronald Reagan’s administration advanced American semiconductor production and enabled the development of the internet. During all of the most productive periods of our past, Americans used private-public partnerships to strengthen and bolster our economy. Why can’t we do it again?

The simple answer is that we can do it again. And if we’re going to compete in the 21st century, we have to. Because development isn’t a one-off achievement — it’s the fruit of continuous innovation and coordination between all sectors of society. We can’t ensure American energy resilience without new technologies and techniques. We can’t maintain national strength if inputs to our military industrial base come from China. And we can’t protect public health without the ability to make drugs of our own.
The American people — and the people of the world — need the U.S. to get back in the saddle and regain economic leadership. That won’t happen without the hard work and ingenuity of private companies. But it also won’t happen without targeted investments from the federal government. Strategic public financing is an American tradition that’s behind many of our greatest national achievements. It’s time we restored it.

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There’s still time to reduce your tax bill or boost your refund for 2022, according to financial experts.
You may consider tax-loss harvesting, Roth conversions or charitable donations to lower taxes.
But you must complete these tax-saving moves by Dec. 31 to count for the 2022 tax year.

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‘Take lemons and make lemonade’ with tax-loss harvesting

With the S&P 500 Index down nearly 20% for 2022 as of midday Dec. 19, it may be a good time for tax-loss harvesting, which allows you to offset brokerage account profits with losses, Roberge said.
After reducing your 2022 investment gains, you can use additional losses to lower regular income by $3,000 and carry the remaining losses forward to future tax years.  

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Karen Van Voorhis, a CFP and director of financial planning at Daniel J. Galli & Associates in Norwell, Massachusetts, also suggested the strategy, since “we haven’t seen losses like this in more than a decade.”

“Harvesting losses is an easy way to take lemons and make lemonade at the end of a less-than-optimal year for the stock market,” she said.

Consider a year-end Roth conversion

Another strategy to consider when the market dips is a Roth individual retirement account conversion, which moves pretax funds to a Roth IRA for future tax-free growth. You may, however, owe taxes on the converted amount.
There are two benefits of Roth conversions in a down market: You can buy more shares for the same dollar amount, and you may pay less taxes on the transferred portion.

Of course, you’ll want to know how the conversion affects your 2022 taxes, because more adjusted gross income may trigger higher Medicare premiums, among other tax consequences.
But with the year nearly over, it’s easier to estimate 2022 income and see how the conversion may affect your taxes, said Kevin Burkle, a Jacksonville, Florida-based CFP and founder of HCP Wealth Planning. 

‘Bunch’ multiple years of charitable giving with a donor-advised fund

With a higher standard deduction since 2018, you’re less likely to itemize deductions on your tax return — such as charitable gifts or medical expenses — making these tax breaks harder to claim. 
The reason is that you choose the standard deduction or itemized deductions on your return, whichever is greater. For 2022, the standard deduction is $12,950 for individuals and $25,900 for married couples filing together. 

One way to optimize charitable giving is to “bunch” multiple years of gifts into one through a so-called donor-advised fund, explained Philip Herzberg, a CFP and lead financial advisor at Team Hewins in Miami. The account acts like a charitable checkbook and offers an upfront deduction.
The best investments to give are “highly appreciated publicly traded stocks,” he said. You’ll avoid the capital gains taxes you’d otherwise owe from selling, which reduces levies while “maximizing philanthropic impact,” he said.

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