How to Save on Your Taxes and Other Last-Minute Tax Tips

You may still be able to reduce your tax bill by contributing to an I.R.A., for instance. And if you have questions, the I.R.S. is offering free walk-in help on Saturday.

After two years of extended deadlines, tax filing in April is back — and fast approaching.

The pandemic led to delays in filing deadlines that stretched into late spring or even summer. But this year, the filing date for most taxpayers is April 18, a little more than a week away.

Even so, there may still be a few things you can do to reduce your tax bill. Here are some steps to consider.

There’s still time to contribute to a traditional individual retirement account for the 2021 tax year and take a deduction — if you qualify. I.R.A. contributions for 2021 can be made until the filing deadline — up to $6,000 for an individual and $7,000 for people who were 50 or older at the end of 2021. Your deduction may be limited, however, depending on your income and whether you have a workplace retirement plan.

People who are self-employed can put more of their earnings away by contributing to a Simplified Employee Pension plan, or SEP I.R.A. The contribution limit for a SEP I.R.A. for 2021 is 25 percent of your compensation or $58,000 — whichever is less. (You may also have more time to contribute to a SEP I.R.A. If you get an extension to Oct. 15 to file your tax return, you have until then to make a contribution.)

The deadline for contributing to a Roth I.R.A. for 2021 is also April 18 — but since you don’t get a tax deduction for depositing money into a Roth, it won’t lower your tax bill.

You may also be able to reduce your taxable income by contributing to a health savings account, or H.S.A., by the filing deadline. To be eligible, you must be covered by a health plan that meets specific criteria, like a high deductible (at least $1,400 for an individual for 2021), said John Larson, vice president of benefit solutions at Conduent, a business services company.

If you qualify, the contribution limit for 2021 is $3,600 for an individual and $7,200 for families. People 55 and older can contribute an extra $1,000.

If you had eligible health coverage for just part of 2021, the maximum contribution you can make may be less, said Rita Assaf, vice president of retirement at Fidelity Investments. For example, someone enrolled in a qualifying health plan for six months could contribute up to $1,800 — half the maximum.

But there is an option that lets you contribute more to your H.S.A., known as the “last month” rule, Ms. Assaf said. Here’s how it works: If you are eligible to contribute to an H.S.A. on the first day of the last month of the tax year — let’s say Dec. 1, 2021 — you are considered eligible for the entire year and may contribute up to the maximum. But there’s a catch: You must keep your high-deductible health coverage for the next 12 months. If you lose qualifying health coverage before the end of 2022, you will owe taxes and possibly a penalty on the extra contribution, the I.R.S. says.

Money is contributed to an H.S.A. tax free. It’s also tax free when it’s withdrawn to pay for eligible medical expenses, and can be invested and grow free of federal taxes. The accounts go with you if you change employers.

At the state level, a few states don’t offer the same tax breaks. California and New Jersey tax H.S.A. contributions, while New Hampshire and Tennessee tax H.S.A. earnings, including interest earned and investment gains, according to an H.S.A. provider, Lively.

And for those of you who haven’t started to calculate your taxes and now realize you can’t make the tax deadline, you can file for an automatic extension. This gives you until Oct. 15 to get your return prepared and submitted.

“You’ll want to extend if you do not have the information to prepare a complete and accurate return,” said Henry Grzes, lead manager for tax practice and ethics at the American Institute of Certified Public Accountants.

But an extension to file doesn’t give you more time to pay. So you’ll need to make your best estimate of what you may owe and pay the government by April 18.

Some people may worry that they can’t pay, so they don’t submit a return. But that creates more problems, including penalties for failing to file, Mr. Grzes said. You should file and pay what you can, he said, and then contact the I.R.S. to discuss an installment plan to pay any balance after your return is processed. To estimate what you owe, he said, check last year’s return or, if you’re using do-it-yourself tax software, enter what information you have available to get a rough amount.

The Justice Department warned taxpayers recently to use caution when choosing a tax professional, noting that it has taken action against numerous dishonest preparers over the past year. Red flags include preparers who ask you to sign a blank return or refuse to sign a return they have prepared (known as a “ghost” return), will not let you review your return before filing it or are depositing your refund in a way that isn’t clear to you. The I.R.S. offers tips for choosing a preparer on its website and offers a directory of credentialed preparers that can be searched by ZIP code.

The Internal Revenue Service is offering free walk-in help — no appointment needed — at its Taxpayer Assistance Centers in numerous cities on Saturday, April 9. The office won’t prepare returns, but taxpayers can get questions answered and receive guidance.

Free options for tax preparation include I.R.S. Free File and the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs. You can search the I.R.S. website for locations.

If you’re self-employed or are otherwise required to pay quarterly estimated taxes, the first payment deadline is April 18. You can use Form 1040-ES to figure how much to pay.

Sophie Tremblay

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