Rosalind Evans
As the federal tax deadline looms just two weeks away, many individuals might scramble to adjust their tax bill or enhance their refunds. While it’s true that the window for some tax-saving strategies has closed with the end of the year, experts highlight that there are still impactful actions you can take to mitigate taxes or maximize returns before the April 15 cutoff.
Mark Steber, the chief tax information officer at Jackson Hewitt, points out the enduring appeal and utility of contributing to a pretax individual retirement account (IRA). “They’re still trendy, and it’s just good planning,” he states, underlining the potential for such contributions to lower your adjusted gross income and offer “an immediate deduction,” especially if you meet the eligibility requirements. This option remains available until the tax deadline of 2023, allowing contributions up to $6,500 or $7,500 for those aged 50 and above.
Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida, recommends considering a Roth IRA contribution for those in lower tax brackets. While it doesn’t immediately reduce taxes, the investment grows tax-free, providing a long-term benefit that might outweigh the lack of an upfront deduction for certain taxpayers.
Another strategy often overlooked is contributing to a spousal IRA for nonworking spouses. Laura Mattia, CEO of Atlas Fiduciary Financial in Sarasota, Florida, says this move is “underutilized.” This approach allows married couples filing jointly to double their IRA contributions, provided the working spouse has sufficient earned income.
Lastly, contributing to a health savings account (HSA) can offer a triple tax advantage for those with high-deductible health plans: deductions at contribution, tax-free growth, and tax-free withdrawals for qualifying medical expenses. The limits for 2023 are $3,850 for individual coverage and $7,750 for family coverage, with an additional $1,000 allowed for those 55 and older.
These strategies highlight the importance of making informed decisions until the last minute to optimize your tax situation. Whether through traditional or Roth IRA contributions, spousal IRAs, or HSAs, you can still reduce your tax liability or increase your refund. As always, consult a tax professional to ensure these strategies align with your financial plan and tax situation.
