Last Minute Tax Savers

For the most part, the IRS operates on a calendaryear basis. It’s too late, for example, to make deductible charitable contributions for 2023-only donations made by December 31 qualify. But there are some exceptions that, along with reducing your 2023 tax bill, could improve your retirement security and lower your costs for health care. Contribute to a retirement account. If you’re not enrolled in a workplace retirement plan, you can deduct a contribution to an IRA of up to $6,500, or $7,500 if you were 50 or older, for 2023. You have until April 15, 2024, to make your 2023 contribution. Contributions to a traditional IRA will reduce your adjusted gross income on a dollar-for-dollar basis, which could also make you eligible for other tax breaks tied to your AGI.

If you worked for yourself in 2023 or had a side gig, you may be able to sock away even more money-and significantly lower your tax bill. You have until April 15-or October 15 if you file for an extension-to set up and contribute to a SEP IRA, a retirement plan designed for self-employed workers, small businesses and sole proprietors. For 2023, you can deduct contributions of up to 20% of net self-employment income, up to a maximum $66,000.

You also have until April 15 to contribute to a Roth IRA for 2023. Contributions to a Roth are aftertax, so they won’t lower your tax bill. But if you’re 59½ or older and have owned your Roth for at least five years, withdrawals are tax-free. Contributing to a Roth will also protect your savings from future tax hikes

Put funds aside for health care costs. You have until April 15 to set up and fund a health savings account for 2023. To qualify, you must have had an HSA-eligible insurance policy in 2023 that started no later than December 1. The policy must have had a deductible of at least $1,500 for individual coverage or $3,000 for family coverage. You can contribute up to $3,850 to a 2023 HSA if you had single coverage or $7,750 if you had family coverage. You can contribute an additional $1,000 if you were 55 or older in 2023. Contributions reduce your adjusted gross income. The money in your account will grow tax-free, and withdrawals to pay medical expenses are also tax-free