Tax Day is fast approaching — it's time to take stock of opportunities to reduce your tax burden and grow your savings. Among the often-overlooked tools available are the Individual Retirement Account (IRA) and the Health Savings Account (HSA). Both offer unique tax advantages that can significantly impact your financial health. Whether planning for retirement or managing healthcare costs, maximizing contributions to these accounts before April 15, 2025, is a worthwhile step.
Contribute to Your HSA
Health Savings Accounts offer triple tax benefits: you can make tax-deductible contributions, enjoy tax-free withdrawals for medical expenses, and benefit from tax-free growth. The deadline for making contributions for the 2024 tax year is April 15, 2025. For 2024, the contribution limits are set at $4,150 for individual coverage and $8,300 for family coverage, with an additional $1,000 catch-up contribution for those 55 or older.
HSAs not only help cover short-term medical costs but are also a strategic tool for long-term healthcare funding. For instance, if the funds remain in your HSA over the years without immediate spending, they can grow substantially, helping with future expenses. Consult with a financial advisor to ensure you're making the most of this account.
Maximize Your IRA Contributions
As you consider your IRA options, remember that the contribution deadline for the 2024 tax year is also April 15, 2025. The annual contribution limits are $7,000 for those under 50 and $8,000 for individuals aged 50 and above. Depending on income and filing status, these contributions may qualify for tax deductions, providing an immediate benefit.
Such contributions not only help bolster your retirement savings but also reduce your taxable income. Be sure to verify whether you are eligible for a Roth IRA or traditional IRA, so you can make informed decisions about where to direct your funds.
As the deadline looms, now is the time to act. Consult with a financial advisor or tax professional to determine eligibility and any specific limits applicable to your situation. Double-check balances and make contributions today to avoid the last-minute rush and ensure you take full advantage of these valuable savings strategies.
