Tax Day is fast approaching, with Americans either due to file by April 18 or. If you’re one of the millions of people who tend to wait until the eleventh hour to file their return, there’s still time to take steps that could reduce what you owe or get a bigger refund.
About 91 million people filed tax returns as of April 1, according to the most recent IRS statistics. In a typical year, the tax agency receives about 160 million tax returns, meaning nearly 70 million Americans had yet to file their taxes in the last two weeks before the deadline. . The typical refund so far is $3,226 in 2022, the agency said earlier this month.
Among the strategies still open to taxpayers who haven’t yet filed are putting money in an Individual Retirement Account (IRA) or a Health Savings Account (HSA), said Eric Bronnenkant, tax manager at Betterment, at CBS MoneyWatch. These strategies can help reduce your taxable income while providing longer-term benefits through increased retirement savings or the triple tax advantages provided by an HSA.
“The IRA and HSA deadline is the April 18 tax filing deadline,” Bronnenkant noted. “Once you miss them, you can’t get them back.”
Here are some last-minute tax measures that can put money in your pocket.
Invest in an IRA
Taxpayers can still invest up to $6,000 in an IRA for the 2021 tax year until April 18, according to the IRS. For people over 50, this amount is increased to $7,000 to help older workers save more for their retirement.
Traditional IRAs help reduce your tax burden because they can be deductible up to the contribution limit, which means your taxable income will be reduced by the amount you put into the IRA. At the same time, you’ll save money for your golden years, a great tax benefit that can have big returns over a career.
“Especially for new hires, investing money can be difficult, but it can pay off in the long run,” Bronnenkant said.
However, there are some limitations to this strategy. The deduction is fully available to people who are not covered by a pension plan at their workplace. If you have a workplace retirement plan, such as a 401(k), the full deduction is capped based on income. For example, a single filer who has a 401(k) can take the full deduction for an IRA contribution if they earn less than $66,000. (See the IRS website for guidelines.)
It’s also important to note that Roth IRAs are not tax-deductible because they work by investing after-tax income in investment vehicles. In retirement, people can withdraw the money tax-free, which is why many tax experts recommend these accounts to people who expect to be in a higher tax bracket when they retire.
Save Money in an HSA
The contribution deadline for the 2021 tax year for health savings accounts is also April 18. For those eligible for these vehicles, this can provide a powerful tax advantage.
HSAs are available to people with high-deductible health care plans, which the IRS considers any plan with a deductible of at least $1,400 for an individual or $2,800 for a family.
The IRS says individuals can save up to $3,600 for the 2021 tax year, while families can save up to $7,200. Contributions are deductible, which means you can reduce your taxable income by the amount you contributed to the HSA. But there are also other advantages. Money grows tax-free and money taken out to pay for medical expenses can be earned tax-free.
“It’s triply tax-free,” Bronnenkant said.
Dunning checks: did you miss any?
The IRS is also urging people to make sure they haven’t missed any federal stimulus money from 2021. The government’s third stimulus check was issued last year, along with six months of stimulus payments. child tax credit. Eligible people who may have missed some of the money can claim it on their tax returns.
Untilcould still be up for grabs, according to a recent report by the Treasury Department’s tax administration inspector general. People who may have missed out include families who had a new child in 2021. This is because the IRS relied on the previous year’s tax return to determine the eligibility, meaning the tax agency would not have been aware of children born or adopted in 2021.
To claim the recovery money on your tax return, find line 30 on Form 1040 for 2021, titled Recovery Rebate Credit. But make sure you’re calculating this correctly by checking your records – if you claim money that isn’t owed to you, your tax return will be flagged for review, increasing processing time and a potential.
Likewise, if you missed child tax credit advance payments, you can complete Form 8812 and file with your 1040. Again, if you are claiming money that is not owed to you, your return revenue could be delayed.
Do you have any unclaimed refunds from 2018?
Finally, the IRS recently stated that it did not claimand the tax agency is urging people to act before April 18 to claim the money they are owed.
The unclaimed refunds are linked to about 1.5 million taxpayers who failed to file taxes in 2018, the agency said. Because there is a three-year period to claim the refunds, the window to get the money will close on April 18. .)
Getting the money will take extra work, as the IRS requires people to file paper tax returns for 2018 to get their unclaimed refunds. The agency says to check the last page of the current Form 1040 to find out where to send the statement. It’s organized by state, so taxpayers in Alabama, Georgia, and several other southern states should send their returns to an IRS office in Kansas City, Missouri.
The median value of unclaimed tax refunds is $813, according to the IRS.