Last Minute Tax Moves to Make

This weekend I finished up my income tax submission for 2022. I was once able to complete all of this by February 1, but some of my tax forms seem to come in later each year.

Working through my taxes provided a reminder that there are still things you can do to lower your 2022 taxes. Although the end of the year is the deadline for most of the tax moves you can make, there are a handful that you can take advantage of right up until this year’s April 18th (normally April 15th) tax deadline.

Conventional IRA

The most important is that you can still make a 2022 contribution to an Individual Retirement Account (IRA) to reduce your 2022 taxable income. The amount of deduction you can take depends on your income, your age, and whether you or your spouse are covered by a retirement plan at your job.

If you and your spouse both have no coverage by a work retirement plan, you can take the maximum deduction, according to the Internal Revenue Service (link). Those limits are the greater of $6,000 ($7,000 if you’re age 50 or older), or up to your taxable compensation for the year.

If you are married, over 50, not covered by a work retirement plan, and happen to be in the 24% tax bracket, you could lower your federal income taxes by $3,360 by contributing the maximum for you and your spouse. State income taxes are usually also exempted from these contributions.

Over time, these IRA contributions will grow tax-free until you withdraw them. However, when you retire, the withdrawals you make will be taxable. If you believe your income tax rate will be higher in retirement than it is today, then it may make more sense to make your contributions into a Roth IRA.

Roth IRA

A Roth IRA is an IRA that allows qualified withdrawals on a tax-free basis if certain conditions are satisfied. They operate similarly to conventional IRAs, and have similar contribution limits and certain qualifiers. As with a conventional IRA, you still have until April 18th to make a contribution for the 2022 tax year. The tax treatment is the primary difference in the two accounts.

One situation that could favor the conventional IRA over the Roth is if you presently live in a state with a high income tax, but you expect to live in a state with no income tax at retirement. That way you can get the tax deduction today, but you won’t (depending on the state) pay any state income taxes on withdrawal.


A final category you can take advantage of up until the tax deadline is the Health Savings Account (HSA). I covered HSAs previously in The Best Savings Vehicle You Will Ever Find. In many ways they are superior savings vehicles to conventional and Roth IRAs. If I could only maximize one type of savings vehicle for a year, it would be my HSA.

In any case, it’s probably a good idea to talk to your accountant to see if any of these deductions make sense prior to the filing deadline. It very much depends on your individual circumstances, but since you are extremely limited at this point on the 2022 tax moves you can make, they are worth considering.

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