THE deadline to file your 2024 federal income tax return is fast approaching on April 15.
However, there’s still time to shrink what you owe or boost your refund with one savvy financial move.
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If you have a traditional Individual Retirement Account (IRA), a last-minute contribution before the tax deadline could reduce your taxable income.
In some cases, you could potentially save as much as $1,540.
IRA contributions
The IRS allows you to make contributions for the previous tax year up until the filing deadline.
That means any money you add to your traditional IRA before April 15 can still count toward your 2024 taxes.
For 2024, the contribution limit is $7,000 if you’re under 50 or $8,000 if you’re 50 or older.
These contributions to an IRA are made with pre-tax dollars, meaning every dollar you contribute can lower your taxable income.
This could potentially place you in a lower tax bracket.
To estimate your savings, multiply your marginal tax rate by the amount you contribute.
For example, a taxpayer in the 22% bracket who contributes the full $7,000 could shave roughly $1,540 off their tax bill.
BE AWARE
Keep in mind that not everyone will qualify for the full deduction.
If you or your spouse is covered by a workplace retirement plan like a 401(k), your income will determine how much of your contribution you can deduct.
For high earners, the deduction may be limited or phased out entirely.
In the event that neither spouse is covered by an employer plan, the full contribution will typically be deducted regardless of your income.
If you contribute to a Roth IRA, funds are made with after-tax dollars, so they won’t reduce your taxable income now.
However, they do grow tax-free for the future.
GETTING SET UP
Setting up an IRA is quick and can be done online or at most banks.
You can fund the account via direct transfer, check, or even by rolling over funds from another IRA or a 401(k).
You also don’t need to deposit the full amount at once.
All you’ll have to do is make sure your total 2024 contributions are in by April 15.
Even smaller amounts can make a noticeable difference when it’s time to tally up your taxes.
This could be your smartest move to save money before Tax Day.
2025 Tax Season
Tax season started on January 27 and folks must have theirs completed filed on April 15.
Those who fail to file by that time may face penalties.
However, taxpayers who need more time may file for an extension – this gives them until October 15.
The way to do this is by filling out Form 4868, the Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
This can be done by mail, online with an IRS e-filing partner, or through a tax professional.
While there’s no set schedule, the IRS revealed that taxpayers may receive refunds within 21 days of filing.
Just be sure to avoid making mistakes on any forms as that could tack on extra time.
Those filing through mail will likely get their returns within a month or could even face delays as the IRS processes millions.
As of January 31, the average refund amount totaled $1,928, per the IRS.
This is compared to the $1,395 for the same period in 2024.
The average direct deposit refund for 2025 was even higher, the IRS said, at $2,069.
To check the status of your refund, The IRS has an online tool called Where’s My Refund?
This works within 24 hours of e-filing and generally within four weeks of filing a paper return.