46 KIPLINGER’S PERSONAL FINANCE^ 03/2020ISTOCKP
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Last-Minute Tax Savers
You must act before December 31 to lock in most tax-saving financial moves, but there are still
a few things you can do between now and April 15 to lower your tax bill.Contribute to a health savings account. You have until April 15 to set up and fund a health
savings account for 2019. To qualify, you must have had an HSA-eligible insurance policy at least
since December 1. The policy must have had a deductible of at least $1,350 for individual cover-
age or $2,700 for family coverage. You can contribute
up to $3,500 to an HSA if you had single coverage or
$7,000 if you had family coverage. You can contribute
an additional $1,000 if you were 55 or older in 2019, or
another $2,000 if you were married and both spouses
were at least 55. Contributions to an HSA will reduce
your adjusted gross income. The money in your ac-
count will grow tax-free, and withdrawals used to pay
medical expenses are also tax-free.Stash money in an IRA. You also have until April 15 to
contribute to an IRA for 2019. If you’re not enrolled in
a workplace retirement plan, you can deduct an IRA
contribution of up to $6,000, or $7,000 if you were 50
or older in 2019. As with HSAs, contributions to a tradi-
tional IRA will reduce your adjusted gross income on a dollar-for-dollar basis, which could also
make you eligible for other tax breaks tied to your AGI.
Workers who have a company retirement plan but earn below a certain amount may qualify
to deduct all or part of their IRA contributions. For 2019, this deduction phases out for single
taxpayers with AGI of between $64,000 and $74,000; for married couples who file jointly, the
deduction phases out between $103,000 and $123,000.
If one spouse is covered by a workplace plan but the other is not, the spouse who isn’t covered
can deduct the maximum contribution, as long as the couple’s joint AGI doesn’t exceed $193,000.
A partial deduction is available if the couple’s AGI is between $193,000 and $203,000.popular deduction for itemizers, so if
you’re on the cusp between claiming
the standard deduction and itemizing,
make sure you get credit for all of your
philanthropy in 2019. Gather your
receipts and acknowledgments from
the charities you supported last year.
You can also deduct donations of
clothes, books and other noncash
items. Use the fair market value of
the items—not the amount you paid
for them—when calculating how much
to deduct. (Some tax software pro-
grams provide guidance on valuing
your donated items.)
If you had extraordinary medical
costs last year, deducting your un-reimbursed expenses could push
you into the itemizing pool. However,
you’ll only be allowed to deduct a por-
tion of those expenses. For 2019, you
can deduct unreimbursed medical
expenses that exceed 7.5% of your
adjusted gross income. If your AGI
was $50,000, for example, you would
only be allowed to deduct the un-
reimbursed medical expenses that
exceeded $3,750. The list of eligible
expenses is long, ranging from long-
term care to health insurance co-
payments to prescription drugs. And
if any costs for dental and vision care
aren’t covered by your insurance,
those expenses are also deductible.HEADS-UP FOR RETIREES
If you’re retired, it’s even more im-
portant to start your tax return early.
While you’ll probably claim the stan-
dard deduction, you could be in for
some unpleasant surprises—particu-
larly if you’re a new retiree.
The money you’ve scrupulously
saved in your 401(k) or traditional
IRA will be taxed when you withdraw
it. As is the case for non-retirees, you’ll
also owe taxes on dividends, interest
and capital gains in your taxable ac-
counts. A portion of your Social Secu-
rity benefits may be taxable, too (see
“Your Social Security Questions An-
swered,” on page 54).
That means it’s critical to take ad-
vantage of all the tax breaks available
to you. To start with, you’re eligible
for a larger standard deduction once
you turn 65. For 2019, you can claim
an additional $1,650 for your standard
deduction if you’re unmarried and
not a surviving spouse. If you and your
spouse are both 65 or older, you can
claim an additional $2,600.
If you reached age 70½ by the end
of 2019, you’ll have to take required
minimum distributions from your tax-
deferred accounts
and pay taxes on that
money (see “Ahead,”
on page 9, for
changes to RMD
rules). It’s too late
to do anything about
that now, but it’s not
too soon to look for
ways to lower your
tax bill in 2020.
You can transfer
up to $100,000 a
year from your tradi-
tional IRAs directly
to charity. (If you’re married, your
spouse can transfer an additional
$100,000 to charity from his or her
IRAs.) The transfer counts toward
your required minimum distribution
and is excluded from taxable income.
Depending on your income, you
may also be able to avoid paying taxes
on capital gains from your taxable■ A HEALTH SAVINGS
ACCOUNT COULD LOWER
YOUR 2019 TAX BILL.