top of page

4 Ways You Can Save Taxes Before The Tax Filing Deadline

Jan 6

4 min read

Summary/TL;DR

Contributions made to a Traditional IRA or Health Savings Account (HSA), before April 15th of a given year may be used to offset income on your prior year tax return, assuming you are eligible to contribute to those accounts in the first place.


Furthermore, business owners with 401(k)s can make profit sharing contributions to their plans before their tax filing deadline (including extensions) that may also be used to offset ordinary income from a prior year return. Finally, real estate professionals or those with large amounts of passive income may perform look-back cost segregation studies and claim bonus depreciation before they file their return for massive potential tax savings.


Introduction

Due to the hectic nature of the holidays, last-minute tax planning doesn’t always work out. Fortunately, some deadlines for making tax-deductible maneuvers extend into the next calendar year, providing some tax relief to those who take advantage of them. In today’s post, I’ll briefly discuss 4 of these.


  1. Traditional IRA Contributions

The deadline for making a Traditional IRA contribution for a given year is April 15th of the following year, regardless of whether or not you file an extension. For example, if I contribute to my Traditional IRA on March 30th, 2025, I have the option to count it as a “prior year contribution” that would count towards 2024’s contribution limit and be deductible on my 2024 tax return.


Whether or not your contribution to a Traditional IRA is deductible, however, is not a simple matter. There are three variables that enter the equation here – your Modified Adjusted Gross Income (MAGI), whether or not you are covered by an employer retirement plan (commonly a 401(k), 403(b), or pension), and whether or not your spouse is covered by an employer retirement plan. If both you and your spouse are covered by an employer plan, then your contribution will be fully deductible on MAGI amounts below $123,000, partially deductible on MAGI amounts between $123,000-$143,000, and phased-out completely if your MAGI exceeds $143,000. If only one spouse is covered by an employer plan, then the covered spouse can make a fully deductible contribution on MAGI amounts below $123,000 and a partially deductible contribution on MAGI amounts between $123,000-$143,000, and the non-covered spouse can make a fully deductible contribution on MAGI amounts below $230,000, a partially deductible contribution on MAGI amounts between $230,000-$240,000. Finally, if neither spouse is covered by an employer plan, there is no MAGI phaseout and any contribution will be deductible.

 

  1. HSA Contributions

Health Savings Accounts (HSAs) are tax-advantaged investment accounts that may be contributed to on a pre-tax basis. Unlike Flexible Savings Accounts (FSAs), which HSAs are commonly mistaken for, funds left over in an HSA will carry-over to future years indefinitely. Furthermore, all growth on the investments in an HSA will be tax free if they are used to pay for qualifying health care expenses.


As long as you are covered by a High Deductible Health Plan (HDHP), you are eligible to contribute to an HSA. The annual HSA contribution limit for 2024 is $4,150. If you and at least one other member of your household (spouse, children, etc), are covered by a HDHP, then you are considered to have “Family Coverage”, and your allowable HSA contribution doubles for the year ($8,300 in 2024).


Unlike Traditional IRAs, there are no complicated phaseouts to keep track of with HSAs. As long as you contribute, and assuming you are eligible to contribute to an HSA in the first place, your contribution will qualify as an above-the-line deduction regardless of your income. Finally, like Traditional IRAs above, you have until April 15th to make a contribution to an HSA that can count against your taxable income for the previous calendar year, regardless of whether or not you file an extension.


  1. 401(k) Profit Sharing Contributions

If you’re self-employed, then you can make profit sharing contributions to a 401(k) to massively reduce your tax burden for the year. Profit sharing contributions are required to be non-discriminatory, so they must be given to all eligible participants in a 401(k) plan, regardless of whether or not they chose to participate.


Unlike Traditional IRAs and HSAs discussed above, you have until the end of your tax filing deadline, including extensions, to make profit-sharing contributions that count for the prior tax year. Depending on your entity type, this could be as late as September 15th or October 15th. For example, if ABC Company (an LLC taxed as an S-Corp), files an extension for their 2024 tax return, they can make profit sharing contributions to their 401(k) plan as late as September 15th, 2025 that can be deducted from their 2024 income. Finally, the 401(k) plan must have been effective in the calendar year for which the contribution is being made. In other words, you can’t start a new 401(k) plan in 2025 and make a profit sharing contribution that would count against your 2024 taxes.

Finally, the contribution limits for profit-sharing contributions are quite large, making this an excellent option for massively decreasing your tax bill if you have the income or cash to make large contributions.


  1. Cost Segregation Studies and Bonus Depreciation

A cost segregation study allows you to claim depreciation on a real estate investment property over an accelerated timeline, essentially “front-loading” your depreciation deductions. If you have large amounts of passive income, or are a real estate professional, this can create a huge windfall in tax savings!


Single family rental properties are usually depreciated on a “straight line basis” over 27.5 years. After performing a cost segregation study, however, there are some components of the property that can be depreciated in less time, allowing you to take higher depreciation amounts in the years following your original purchase of the property. Furthermore, you can claim bonus depreciation on any “eligible property” from the cost segregation study (typically property with a useful life of 15 years or less) and immediately depreciate 60% of it (in 2024)!


If you have property that was either purchased or was put in service in the prior calendar year, you can perform a “look-back” cost segregation study anytime afterwards. In other words, as long as the study is done before you file taxes, you can use any resulting depreciation from eligible property on last year’s tax return.

how much do you need to retire?

Download the FREE Retirement Savings Calculator now!

Click to download the calculator

bottom of page