Under normal circumstances, tax returns for 2019 would have been due a few days ago on April 15. But as every American knows, we're definitely not living in normal circumstances. So although the 2019 tax year is long over, you won't have to file your returns for it until July 15.

The extension of the tax filing deadline provides you with an unprecedented opportunity to cut your tax bill for last year, even though we're well into 2020 already. You can do that by making an IRA contribution before July 15.  

Smiling woman putting money into piggy bank.

Image source: Getty Images.

How much you can reduce your 2019 tax bill with an IRA

When the tax filing deadline was changed due to the coronavirus, the deadline to make a contribution to a traditional or a Roth IRA was also pushed to July 15. 

That means you have several more months to put money into your retirement account for 2019 and still claim a tax credit for your contributions. If you opt for a traditional IRA, which comes with an up-front tax credit, you can realize this savings when you file this year. 

The maximum deductible contribution you can make to an IRA for 2019 is $6,000 if you're under 50 and $7,000 if you're older. While your ability to claim this full deduction is subject to income limits if you or your spouse have a workplace retirement plan, most Americans can claim it. 

If you do, the table below shows the maximum you could save on your tax bill, depending on your tax bracket. 

Tax Bracket

Maximum Savings With $6,000 Contribution

Maximum Savings With $7,000 Contribution






















Table calculations by author.

This is the amount you could save if all the income you'd have been taxed on had you not contributed would've been taxed at your highest rate. If some of the money would've been taxed at a lower rate, your savings would be lower. 

For example, if you had $39,500 in taxable income as a single filer in 2019, just $24 of your income would normally have been taxed at 22% and the rest would've been taxed at 12% or 10%. So you won't save the full $1,320 if you make a $6,000 IRA contribution. Your savings would be calculated like this:

  • 22% of $24 = $5.28
  • 12% of $5,976 = $717.12
  • Total savings = $722.40

This is still a substantial amount of tax savings just for shoring up your retirement accounts.  

A chance to lower your taxes and increase your retirement savings

If you're eligible to make a deductible IRA contribution and you haven't done so, the extension of the tax filing deadline gives you a golden opportunity to act.

Putting money into an IRA by July could not only reduce your taxes but also give you the chance to invest amid the coronavirus downturn. This could be a chance to invest when stocks are discounted so you can maximize your rate of return while significantly reducing your tax bill.