It’s that time of the year again! Get the grill fired up because summer is officially here.
But wait! Not so fast. You may be procrastinating on one lingering but important task. Did you file your taxes yet? As you may have heard, thanks to the pandemic, the federal income tax due date has been extended from April 15th to July 15th . This gave you an extra three months to file taxes. What’s more, you have the opportunity to make 2019 contributions to individual retirement accounts (IRAs) and health savings accounts (HSAs).
Yes, you heard it. You can still make 2019 contributions to traditional IRAs and HSAs, which are tax-deductible up to the maximum limit for eligible individuals. See how much you may be able to contribute to your traditional IRA in 2019:
|AGE||IRA CONTRIBUTION LIMIT|
|50 and older||$7000|
|HSA COVERAGE TYPE||HSA CONTRIBUTION LIMIT|
So, what may happen to your taxes if you max out contributions? If eligible, you could save big. Here’s a simple example. Let’s say you’re 47 years old, married and in the 22% tax bracket. You have an HSA-eligible family health plan and you and your spouse each own a traditional IRA. You each contribute the maximum amount and benefit from substantial tax savings*:
Not bad, huh? Now, for all those of you who already filed your 2019 tax return, don’t worry! You may be able to take advantage and contribute to your accounts by July 15th. The IRS may let you file an amended tax return by July 15th , so you can report traditional IRA and HSA contributions even after you’ve already filed your return.
Get a head start on 2020 taxes
We get that taxes can be a big headache, but there may be ways to help minimize the impact of taxes in 2020 and beyond. Lean on the experience of a licensed financial professional to see if there are opportunities to reposition your current assets to help ensure you don’t pay more in taxes than necessary. Schedule a complimentary strategy call now.
*Example is hypothetical and for illustrative purposes only. The information is not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment, legal and/or tax advice. If you are seeking recommendations, please contact a legal, tax and/or financial professional.