Smart Tax Planning

You now have until July 15 to save in your IRA and health savings accounts

Key Points
  • Treasury recently gave taxpayers until July 15 to file their 2019 tax returns and pay taxes owed for last year and the first quarter of 2020.
  • Filers now have until that same day to make 2019 contributions to their IRAs and health savings accounts.
  • Put away up to $6,000 in a traditional IRA, plus $1,000 if you're 50 and up, and have it count for last year.

The Treasury Department and the IRS are giving you more time to sock away money in tax-favored accounts – and have it count for 2019.

The IRS announced that savers now have until July 15 to make 2019 contributions into their individual retirement accounts and their health savings accounts, which are typically paired with a high-deductible health plan.

Normally you would have until April 15 -- the typical due date for tax returns -- to put this money away and have it apply to the prior year.

The agencies' decision to move the deadline for IRA and HSA contributions comes on the heels of Treasury's decision to delay the income tax filing date for 2019 to July 15 due to effects of the coronavirus.

Taxpayers have until that date to pay taxes owed for 2019 and the first quarter of 2020, as well as to submit last year's tax returns.

Retiring with one million on a $45,000 yearly salary

For the 2019 tax year, you can save up to $6,000 in your IRA. If you're over 50, you can add in another $1,000.

Further, if you have a high-deductible health plan with a health savings account, you can stash up to $3,500 if you have self-only coverage. That number goes up to $7,000 for family plans.

Throw in an additional $1,000 toward your HSA if you're 55 and over.

Saving in both HSAs and IRAs brings a bevy of tax benefits. HSA contributions are tax-deductible or pretax, while IRA contributions can be tax-deductible depending on your income.

Money in an IRA grows on a tax-deferred basis for retirement. Meanwhile, HSA dollars grow free of taxes and can be used tax-free for qualified medical expenses.

More from Smart Tax Planning:
Tax Day is July 15. Why you should get your return in sooner
Congress may allow you to take $100,000 from your 401(k)
How those coronavirus-fueled losses can cut your taxes