You Have 1 Week Left to Claim These Income Tax Breaks

Couple doing their taxes
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When the IRS pushed Tax Day back to May 17, several related deadlines moved with it.

So, you don’t just have until May 17 to file your 2020 federal income tax return — or request an extension. You have until then to stash cash in several types of tax-advantaged accounts and thus possible score a tax break.

Even if you already have filed your taxes, it’s possible to take advantage of these tax breaks by filing an amended return, which you can do electronically.

Just don’t delay: Monday, May 17, is the deadline for making contributions for the 2020 tax year to the following types of tax-advantaged accounts, assuming that you are eligible.

Individual retirement accounts

You can net a tax break for contributing to a traditional or Roth IRA if you are eligible to do so.

If your goal is to lower your 2020 tax bill specifically, however, you must put your 2020 contribution in a traditional IRA. Roth accounts are the way to go if you prefer to lower your future tax obligations, as we explain in “7 Ways to Save for Retirement Without a 401(k).”

The base contribution limit for both traditional and Roth IRAs for the 2020 tax year is $6,000. Savers who are 50 or older can make an additional contribution of $1,000, for a total of $7,000.

Health savings accounts

HSAs are a type of tax-advantaged account for people with high-deductible health insurance. You can learn more about them in “3 Ways a Health Savings Account Can Improve Your Finances.”

The base contribution limit for HSAs for the 2020 tax year is $3,550 for people with self-only coverage and $7,100 for those with family coverage. People who are 55 or older can make an additional contribution of $1,000.

Archer medical savings accounts

Archer MSAs are another type of tax-advantaged account for certain people with high-deductible insurance. You can learn more about them in IRS Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans.

Coverdell education savings accounts

Coverdell ESAs are a type of tax-advantaged account that can be used to save money for eligible costs associated with college and even elementary and secondary education.

You can learn more in IRS Topic No. 310: Coverdell Education Savings Accounts. Just note that contributions to Coverdell ESAs are not tax-deductible upfront, so they won’t lower your 2020 tax bill. Instead, the account beneficiary gets to withdraw money from the account tax-free.

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