Taxpayers can still save on 2024 taxes with IRA and HSA contributions
- Taxpayers can contribute to IRA and HSA accounts until April 15, 2025.
- Traditional IRA contributions are tax-deductible, while Roth IRA contributions offer tax-free withdrawals in retirement.
- It is important to act early to avoid processing delays and ensure contributions are correctly applied to lower tax liabilities.
In the United States, taxpayers have until April 15, 2025, to make certain contributions that can lower their taxable income for the year 2024. Specifically, contributions to individual retirement accounts (IRA) and health savings accounts (HSA) can still be made to reduce tax liability from the previous year. Individuals can deduct contributions to a traditional IRA from their taxable income, while Roth IRA contributions do not offer immediate tax deductions but provide tax-free withdrawals in retirement. Similarly, HSA contributions made before the deadline are tax deductible, contributing to potential long-term asset growth. Tax advisor Rob Burnette emphasizes the importance of maximizing tax credits and deductions to effectively reduce one's tax burden. He notes that most tax deductions and credits need to be completed by December 31, 2024, but these specific contributions extend the timeline to April 2025. Individuals should carefully monitor their contributions to ensure that they properly account for the deductions on their tax returns. Burnette warns against waiting until the last minute to make these contributions, as processing delays could arise from banks managing a high volume of transactions close to the deadline. He cautions individuals to verify their contribution amounts with their financial institutions to ensure they are accurately reported for tax purposes. Taxpayers seeking these deductions must be proactive in managing their retirement and health savings accounts to benefit from tax relief. Finally, while many expenses associated with homeownership are not tax deductible, mortgage interest does qualify for deduction in the relevant year. Taxpayers can leverage investment in retirement and medical savings accounts to optimize their tax situation effectively by taking advantage of these contributions within the specified timeframe, ensuring they are positioned to minimize their liabilities for 2024 when filing their taxes in 2025.