April 30, 2021
IRS Tax Deadlines Extensions That Can Help You Save
Every year US taxpayers have the opportunity to extend their tax filing deadline to October 15th and are required to make tax payments at the original tax filing deadline. However, for 2021, the IRS tax filing and payment deadline have extended to May 17th.
We have analyzed deadline extensions that can help you decrease your taxable income.
The Individual Retirement Account (IRA) and its Roth variation (a post-tax version of an IRA) each have contribution deadline extensions to May 17th. This is good news for taxpayers because both the traditional and Roth IRA accounts accumulate earnings tax-free.
If you are a married individual with a traditional IRA making less than $196,000 (not covered by an employer retirement plan), an IRA contribution of $6,000 will decrease your taxable income. Assuming that your marginal tax rate is 22%, then your tax savings will be $1,320.
Contrastly, Roth IRA contributions do not lower taxable income in 2020. However, they are generally withdrawn as tax-free distributions at a later date because the income is taxed in the current year and not deferred to a later date.
Health Savings Accounts (HSAs)
Individuals now have until May 17th to make an HSA contribution of $3,600 (or $7,200 per family). This allows taxpayers to lower their taxable income and increases the balance of their tax-advantaged savings account or ability to pay health expenses with pre-tax dollars.
If you are a single individual with wages of $180,000 and a marginal tax rate of 32%, an HSA contribution could lower your taxes by $1,152.
An HSA can be opened individually or through an employer; however, you must be participating in a qualified high-deductible health plan (HDHP) (see Rev. Proc 2020-32).
Other Deadlines Extended
One other deadline extended is the contribution deadlines for Archer Medical Accounts and Coverdell education accounts. There is still time to make a contribution!
A Note About Recent Extensions
Have you made your 1st quarter estimated tax payments yet? This deadline has not been extended and any payments were due by April 15th.
There is still time to file your federal taxes with the IRS! Use this time to evaluate your tax return and find out if there are more ways for you to save on tax.
Deadlines and extensions may vary by state and can be verified by checking with your local tax authority. If you need help finding out how you can save on taxes, contact us at firstname.lastname@example.org.
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