There's a reason we're generally advised to focus on our taxes year-round. The more vigilant we are, the more money we stand to keep for ourselves, and away from the IRS. But even though we're almost a month into 2018, it's technically not too late to make one last move that can lower your 2017 taxes significantly: funding an IRA.

In fact, you actually have until April 17, 2018 (this year's tax deadline) to pump some cash into your IRA. And the closer you get to maxing out your allowable contribution for the year, the more money you'll shave off last year's tax bill.

IRA road sign


Tax savings made easy

While not everyone has access to a 401(k) plan through work, the beauty of the IRA is that anyone with an income can open or contribute to one. Now there are two main types of IRA: traditional and Roth. If you're looking to snag a break on your 2017 taxes, then you'll want to stick with the former, because Roth IRA contributions are not tax-deductible (though there are plenty of other good reasons to open a Roth).

The maximum amount of money you can contribute to your 2017 IRA is $5,500 if you're under 50 and $6,500 if you're 50 or older. These limits, incidentally, remain unchanged for the current tax year. What this means is that if you're 45 and max out, and your effective tax rate is 25%, you'll shave $1,375 off your tax bill, just like that. Furthermore, as is the case with all tax deductions, your actual savings will increase proportionally with your effective tax rate, so that if you're 45 and max out but have an effective tax rate of 30%, your savings will equal $1,650.

That said, the IRA deduction is unique in that you're not required to itemize on your tax return in order to claim it. Most other deductions don't work this way.

When you have a 401(k) as well

At this point, the idea of funding an IRA and snagging a pretty sweet tax break probably sounds good. But what if you're already covered by a 401(k) or other retirement plan through your employer? If that's the case, then you might still manage to claim a deduction for putting money into an IRA -- it just depends on how much you earn. Here's what the 2017 income limits look like when you're covered by an employer-sponsored retirement plan:

Tax Filing Status

Income Limits for IRA Deduction (AGI)

Single or head of household


Married filing jointly


Married filing separately



What this means is that if you're single, your AGI last year was $73,000, and you were covered by a retirement plan through your employer, you can't deduct IRA contributions on your return. But if you're single, your AGI last year was $65,000, and you were covered by a retirement plan through work, you can take a partial deduction for the money you put into your IRA. Furthermore, if you're married and don't have a retirement plan through work, but your spouse does, you can't take an IRA deduction if your AGI is over $10,000 if filing separately or over $196,000 if filing jointly.

Don't wait

Funding last year's IRA is a great way to reap some tax savings, but you'll need to get moving. Though you have until this year's filing deadline to fund your 2017 IRA, which is Tuesday, April 17, 2018, it often takes a day or two for funds to clear your account, so don't expect to walk in on April 17 and get your IRA in order. Rather, fund that account in advance -- today, even. And if you need the extra couple of months to save, mark your calendar now so that you don't forget to make that contribution in time. The IRA deduction is one of the most lucrative tax breaks you can get, so be sure to take full advantage of it while you still can.