February 22, 2023

Think You Might Owe the IRS in April? 3 (Easy!) Ways to Lower Your Tax Bill

20 minutes

One of the trickiest things about investing in retirement accounts is that by the time you know how much you could’ve contributed for a tax break, it’s too late (e.g., you can only make 401(k) contributions through Dec. 31).

But there are a few accounts in the tax-advantaged investing world that allow contributions right up until the tax deadline, making them incredible options for last-minute savings.

After all, I prefer deductions that come from investing over deductions for spending: Why would I spend $100 to save $32 when I could invest (read: keep) $100 to save $32?

Reminder: I’m not a licensed tax professional. Please consult your CPA and do your own research before making big money moves.

Learn more about our sponsor, TaxAct: https://www.taxact.com/moneywithkatie

Transcripts can be found at podcast.moneywithkatie.com.

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Mentioned in the Episode

The Traditional IRA: https://www.irs.gov/retirement-plans/ira-deduction-limits

3 Ways to Lower Your Tax Bill & Navigate Rollover IRA Forms: https://moneywithkatie.com/blog/3-ways-to-lower-tax-bill-rollover-ira-forms

2022 & 2023 IRA deduction limits: https://www.irs.gov/retirement-plans/2023-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-not-covered-by-a-retirement-plan-at-work

The Roth IRA: https://www.irs.gov/retirement-plans/roth-iras

Roth IRA Income Limitations: https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022

The Backdoor Roth IRA: https://www.youtube.com/watch?v=QTODFAUIBhY&ab_channel=MoneywithKatie

The Money with Katie Show on building a diversified portfolio: https://youtu.be/qTkVMGi3dFg

SEP IRA Contribution Limits: https://www.irs.gov/retirement-plans/plan-participant-employee/sep-contribution-limits-including-grandfathered-sarseps

Self-employment tax: https://www.ssa.gov/pubs/EN-05-10022.pdf

Solo 401(k) deadline: https://www.mysolo401k.net/solo-401k-faq-when-is-the-deadline-to-open-a-solo-401k-for-2022-and-make-2022-401k-contributions

High-Deductible Health Plans (HDHP): https://www.irs.gov/publications/p969

HSA Contribution Limits for 2022: https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits

Saving on FICA tax via the HSA: https://www.voya.com/voya-insights/importance-educating-employers-hsa-program-fica-savings

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