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10 Ways You Can Still Lower Your 2019 Taxes

Author: Dan Caplinger | February 19, 2020

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Do you want more money back from the IRS?

Tax season is here, and many people want to get their taxes filed so they can get their refund as soon as possible. But you also want to get as big a refund as you can, and that means taking advantage of any last-minute tax breaks you can find.

Luckily, it's not too late! Here, we'll look at 10 ideas that can reduce your tax bill on your 2019 return.

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1. Put money in a traditional IRA

Most people qualify to deduct contributions to a traditional IRA from their income. For the 2019 tax year, the limits are $6,000 for those who aren't yet 50, or $7,000 for those 50 or older. Even though we're well into 2020, you can still make 2019 IRA contributions until April 15 and deduct them on your 2019 tax return.

ALSO READ: Your 2019 Guide to Retirement Plans

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Binder reading retirement plan next to graphs and reading glasses.

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2. Make employer contributions to a self-employed SIMPLE IRA

SIMPLE IRAs are retirement plans that many small businesses and entrepreneurs use to save for their golden years. SIMPLE IRAs allow for employees to elect to save money in a tax-advantaged way and also provides for employers to match a portion of those contributions or set money aside in profit sharing. The employee contribution is generally due Dec. 31, but employers have until the tax filing deadline to get their share in. That's important for self-employed workers who are treated as both employee and employer for these purposes.

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Binders reading Pension and Retirement Plan.

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3. Use a SEP-IRA to boost your retirement savings

SEP-IRAs allow for far larger retirement contributions than SIMPLE IRAs, with 2019 limits coming in at the lesser of $56,000 or 25% of your compensation. SEP-IRAs also give more flexibility on making contributions, as self-employed workers have until the tax-filing deadline for the entire maximum amount if they choose. For those with higher incomes, SEP-IRAs can be an excellent choice for retirement saving.

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Glass jar labeled 401k spilled over with change coming out.

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4. Contribute to a solo 401(k) for the self-employed

The last, more powerful plan available to self-employed individuals is the solo 401(k). Combining the large contributions of the SEP-IRA with the flexibility of allowing both employer and employee contributions, the solo 401(k) takes a bit more work to establish and maintain. Moreover, deductions for solo 401(k) contributions are only allowed if the plan itself was established by Dec. 31. If the plan was in place, though, contributions can occur anytime before the tax filing due date.

ALSO READ: Solo 401(k)s in 2020: What Every Gig-Worker Should Know

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5. Make a health savings account contribution

Those who have high-deductible health insurance coverage are generally entitled to make contributions to a health savings account. HSAs have several tax benefits, including the ability to deduct contributions while taking money out tax-free for medical expenses. You can contribute up until April 15 toward a 2019 HSA and still write off the contribution on your return.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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Estimated tax vouchers

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6. Make a late estimated tax payment

The IRS requires you to have enough tax withheld from your paychecks or other income sources to cover the vast majority of your eventual tax liability. Fall short, and you could owe interest and penalties. But even though the Jan. 15 deadline for fourth-quarter estimated tax payments is long gone, it can still be smart to make a payment of estimated tax before filing your return. That way, you'll stop the clock on any interest and penalties that might be due.

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pair of scissors lying next to word taxes

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7. Look at itemizing deductions

Relatively few taxpayers itemize their deductions anymore, especially given the big boost to the standard deduction that tax reform efforts in late 2017 brought. Yet for some, itemizing can still save you money over taking the standard deduction. If you haven't run the numbers, take a closer look and see if you're lucky enough to pay a smaller tax bill if you go to the trouble of itemizing.

ALSO READ: Here's the 2020 IRS Standard Deduction -- and What It Means to You

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Tax Day written on the fifteenth day on a calendar with money and a pen beside it.

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8. Don't miss the filing deadline

Unless you're one of the few fortunate taxpayers who don't have to file a return, it's important to get your taxes in on time. Miss the deadline, and you'll owe penalties of 5% for every month or part of a month that you're late. It's relatively easy to avoid this penalty by filing for an extension, but keep in mind that you have to request the extension before the deadline.

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9. Pay your taxes even if you file for an extension

One mistake many people make is to file for an extension without realizing they have to pay their tax due by the original filing deadline of April 15. Failing to do so isn't as serious as not filing at all, but you'll still pay a penalty of 0.5% per month or part of a month. There's a place on the extension request form to include payment in order to avoid this penalty.

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Child Tax Credit paper form.

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10. Don't miss out on tax credits

There are many different tax breaks available to taxpayers, but many people don't even realize that they're there. For instance, the IRS estimates that as many as 1 in 5 taxpayers don't claim the earned income tax credit, which can save many low- and middle-income taxpayers thousands of dollars each year. With various credits available for parents, students, the elderly, and others, it can pay to take a closer look at what's available for you.

READ MORE: The Tax Break the IRS Is Begging You to Take

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Tax refund check sits atop 1040 form.

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Save where you can on your taxes

The best tax planning happens throughout the year. But if you're just getting started now, these 10 tips will give you at least a few places to look to try to score some tax savings as the April 15 deadline gets closer and closer.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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