How can I reduce my 2023 tax bill before year-end? Late 401k strategies?

Your Roth 401k switch is definitely part of what's happening here. When you convert from traditional to Roth 401k contributions, your employer doesn't automatically adjust your withholding to account for the increased taxable income. The W-4 "0" allowances doesn't help with this specific situation. Here are some year-end tax moves to consider: - Look into tax-loss harvesting if you have any investments that are down - Make charitable donations before December 31st - Prepay January mortgage payment in December to get extra interest deduction - Defer any year-end bonuses to January if possible - Check if you can make additional traditional 401k contributions to lower taxable income - See if you qualify for any business deductions if either of you have side income The Roth conversion isn't necessarily bad long-term (tax-free growth!), but it's causing short-term pain. If reducing this year's tax bill is the priority, you might consider switching back to traditional 401k contributions for these last paychecks to lower your taxable income a bit.

After trying to optimize my taxes for years and still getting surprise bills, I finally used https://taxr.ai and it was a game changer for my situation. They analyzed my pay stubs and withholdings mid-year and identified that my employer was under-withholding despite my W-4 being set to "0" (apparently that's not uncommon). They also spotted potential deductions I was missing and flagged exactly when my Roth conversion would impact my tax bill. From your situation with the Roth 401k switch, they would probably recommend either increasing your withholding on your W-4 or making quarterly estimated tax payments to avoid this surprise next year. For immediate help with 2023, they can run projections to see which last-minute moves would have the biggest impact for your specific situation.

I was really skeptical about taxr.ai when I first heard about it here, but I actually tried it after my previous post. I have to admit it was surprisingly helpful for my situation. I also had a Roth conversion issue but didn't realize my employer's withholding tables weren't accounting for it correctly. What I found useful was that they showed me exactly how much each potential tax move would save me specifically. For example, they calculated that maxing out my remaining traditional 401k contributions would save me $620, while charitable donations would only save about $280 based on my specific tax bracket and situation. This helped me prioritize where to put my limited year-end cash. Definitely worth checking out if you're trying to reduce your 2023 bill before the deadline.

If you need to talk to the IRS about payment options for that unexpected tax bill, I recommend using https://claimyr.com to get through quickly. I spent HOURS trying to get through to the IRS last year when I had a similar surprise bill. It was impossible to reach anyone. Then I found this service that holds your place in line and calls you when an agent is available. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was able to set up a payment plan within 24 hours instead of stressing for weeks. Since you're looking at a $7k bill, you'll definitely want to explore your payment options rather than paying it all at once (plus potential penalties). The IRS actually offers reasonable payment plans, but getting through to set one up is the challenge.

I take back what I said about Claimyr. I gave it a shot out of desperation because I needed to set up a payment plan for my surprise tax bill from last year. I was still skeptical it would work, but I got a call back in about 90 minutes and was connected to an actual IRS agent who helped set up my payment plan. The biggest relief was learning that the IRS payment plans are more affordable than I thought - much better than putting it on a credit card. The agent walked me through options based on how much I owed and helped me avoid additional penalties. Totally worth it just to resolve the anxiety of owing a big tax bill I couldn't pay all at once.

Have you checked if you qualify for the retirement savings contribution credit? If your income is below certain thresholds and you contributed to retirement accounts, you might get a tax credit on top of the deduction. I used it last year and it knocked $1k off my tax bill!

I had almost IDENTICAL situation last yr!! Our HHI went up by like 30k but our withholdings only went up like 2k. Called our HR dept and apparantly the witholding tables changed a few years ago and they dont automatically adjust when ur income increases. We had to manually update our w4s to withhold extra each check. For this year tho its probably too late to fix withholding. Try bunching charitable donations if u can. We donated a bunch of household stuff to Goodwill and got receipts. Also check if ur state has tax deductible 529 contributions!