Tips for 2021 Tax Savings
February 2, 2022 |
As 2022 is off to a fast start, you are likely beginning to gather your 2021 tax information. Even though we are in the new year, here are three important reminders for actions you can take in 2022 to lower your 2021 tax liability.
Contribute to a Traditional IRA
Individuals can make their 2021 IRA contributions of up to $6,000 ($7,000 if over 50 years old) to a traditional IRA until April 18, 2022. The deductibility of traditional IRA contributions depends on your modified adjusted gross income (MAGI). Contact your Simon Lever advisor to determine if you can receive the maximum deduction from a traditional IRA contribution.
Remember, Roth IRA contributions are always non-deductible on your individual tax return, but you still have until April 18, 2022 to contribute up to the maximum of $6,000 ($7,000 if over 50 years old).
Contribute to Your Health Savings Account (HSA)
An HSA is a savings account designed to set aside pre-tax money to pay for qualified medical expenses for you, your spouse, and dependents. If the funds are used for qualified medical expenses, there is no tax due on distributions. Individuals with family coverage under a high-deductible health plan (HDHP) can contribute a maximum of $7,200 ($9,200 if both spouses are over 55 years old and each spouse makes the additional $1,000 contribution to their own HSA). Individuals with single coverage under a HDHP can contribute a maximum of $3,600 ($4,600 if over 55 years old). Contributions can be made for 2021 until April 18, 2022.
Contribute to a SEP IRA or Solo 401(k)
Self-employed individuals with no employees have the opportunity to contribute to a SEP IRA or solo 401(k), which may provide a much higher potential deduction than a traditional IRA, depending on your self-employment income. You have until April 18, 2022, or until October 17, 2022 when filing an extension, to contribute to your SEP IRA or solo 401(k) for the 2021 tax year.
If you have questions on the above contributions, please contact your Simon Lever advisor.