So here’s the good news – it is possible to save money on your taxes, even at the eleventh hour. Time is definitely running out and options are short on the ground, but this doesn’t mean they’re absent from the equation. Given the fact that you have until Monday the 18th to get your taxes filed, you’re on borrowed time as it is and could really do with making some progress.
Instead of focusing on how much you make, the key lies in thinking about how much you can put to one side before the deadline. So depending on how much you earn, the following options are worth considering:
Lower to Moderate Earners
There’s a special tax credit on the cards for low to moderate earners, worth up to $1,000 per person. For singles earning up to $30,500 and couples on $61,000 or less, all you have to do is put money in a workplace plan or an IRA and fill out form 8880. Even if you don’t qualify for the full $1,000 each, there’s still every chance you’ll be liable for a few hundred dollars, all for filling out a simple form!
Don’t forget that if you and your other half file your taxes jointly, it makes no difference in terms of putting away retirement savings who is the main breadwinner. The spouse earning less (or even nothing at all) can still put away $5,000 in a traditional or Roth IRA.
No 401(k) at work
Research has shown that around one in every two workers in the US still doesn’t have access to a 401(k) at work. Which is of course far from a positive thing, but they can nonetheless make use of traditional and Roth IRAs, while self-employed workers and contractors can opt for a solo 401(k). This basically allows the individual in question to put to one side the same $18,000 current limit of a standard 401(k) along with 25% of your total salary. If you are self-employed, earn well and have no employees, it’s a highly recommended avenue to explore.