A last minute way to reduce your 2021 taxes until Tax Day | Smart Switch: Personal Finance

Last year may be history. But there may still be one thing you can do this week to lower your 2021 tax bill (or beef up your refund), all while building your retirement savings.

You have until Monday, April 18, the official federal tax filing deadline, to make a 2021 IRA contribution of up to $6,000 ($7,000 if you’re age 50 or older).

If you put that money into a traditional IRA, your contribution may be fully or partially deductible, regardless of whether you itemize deductions on your federal income tax return.

A deduction for IRA contributions reduces your adjustable gross income and therefore lowers your tax bill. If your AGI is $50,000, for example, a deductible IRA contribution of $5,000 reduces it to $45,000.

Limits on the amount of a deduction you can take



A last-minute way to reduce your 2021 taxes until Tax Day


You have until Monday, April 18, the official federal tax filing deadline, to make a 2021 IRA contribution of up to $6,000 ($7,000 if age 50 or older)


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You can take a deduction for your full contribution if neither you nor your spouse are covered for a tax-advantaged retirement plan at work.

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But if your employer provides a 401(k), for example, the amount of your IRA contribution you can deduct will be depends on your income.

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