THE end of tax season is nearly here, and there could be a way to save some serious money when filing.
As the deadline of April 15 approaches, one move could lower what Americans might owe to the Internal Revenue Service (IRS).
GettyThere’s a way for Americans to save some cash on their tax returns (stock image)[/caption]Either that or it could significantly boost refund amounts.
Current refund averages for the 2024 tax year are about $3,170 as of the end of March, according to data from CNBC.
To squeeze out more money or potentially wipe the slate clean of anything owed, Americans should make more contributions to an individual retirement account (IRA).
Those with a traditional IRA can continue putting cash into it for the previous year until the April 15 deadline, per Money.com.
Contribute enough to the account for 2024, and it could drop Americans into a lower tax bracket.
That drop could be enough to decrease any outstanding balances owed or even put more money in a refund.
BREAK IT DOWN
There’s even a way Americans with a traditional IRA can calculate how much they’d save by using this last-minute hack.
It involves multiplying their marginal tax rate by the amount put into the IRA.
A marginal tax rate is the “percentage at which your last dollar of taxable income is taxed,” per Fidelity.
The marginal tax rate also determines which bracket an American falls in.
In 2024, the lowest income level Americans who made $11,600 or less fell in the 10% marginal tax rate bracket.
That increases gradually up to 12%, 22%, 32%, and so on.
So, an American who contributes the $7,000 maximum limit to their traditional IRA before the April 15 deadline and multiplies it by their marginal tax rate of 22%, they’d save about $1,540 after filing.
A complete list of the federal income tax rates and brackets can be found on the IRS website.
2025 Tax Season
Tax season started on January 27 and folks must have theirs completed filed on April 15.
Those who fail to file by that time may face penalties.
However, taxpayers who need more time may file for an extension – this gives them until October 15.
The way to do this is by filling out Form 4868, the Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
This can be done by mail, online with an IRS e-filing partner, or through a tax professional.
While there’s no set schedule, the IRS revealed that taxpayers may receive refunds within 21 days of filing.
Just be sure to avoid making mistakes on any forms as that could tack on extra time.
Those filing through mail will likely get their returns within a month or could even face delays as the IRS processes millions.
As of January 31, the average refund amount totaled $1,928, per the IRS.
This is compared to the $1,395 for the same period in 2024.
The average direct deposit refund for 2025 was even higher, the IRS said, at $2,069.
To check the status of your refund, The IRS has an online tool called Where’s My Refund?
This works within 24 hours of e-filing and generally within four weeks of filing a paper return.
GET STARTED
There are still some exceptions, like if a taxpayer makes income over a threshold filing jointly and their spouse has a workplace retirement plan.
In that case, it’s likely a full deduction wouldn’t go through.
Still, certain taxpayers may also be able to deduct all their IRA contributions up to the $7,000 limit without a plan from their employer, like a 401(k).
Those interested can set up a traditional IRA in only a few minutes through several companies like Fidelity, Vanguard, and more.
Money can be deposited through a bank account online almost instantly to meet the contribution limit.
Those with a 401(k) or IRA from an employer or another provider can also roll it over.
There are also other things Americans should consider as tax season ends.
Some automatically qualify for a life-saving “automatic extension” on tax returns and payments this year.
Additionally, there are at least seven ways to file taxes for free.
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