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4 Last-Minute (and Totally Legal) Ways to Lower Your Tax Bill

Whether it’s socking money into an IRA or HSA or even using your couch-surfing buddy as the basis for a deduction, here’s how to dodge the IRS down the homestretch.

Ah, April. The smack of baseballs hitting the catcher’s mitt. Bright flowers blooming. That first lukewarm day when women walk down the street with practically nothing on. 

Uncle Sam sucking your checking account dry on tax day.

I know, I know: We all want to live in a country with an army, paved roads, and clean water. But you don’t have to be a placard-waving Tea Party activist or Wesley Snipes to wish you could reduce the size of the check you send to the IRS in a few weeks. And good news: Though most tax-saving moves have to be made long before tax day, there are still a few financial maneuvers you can execute at the last minute to reduce your 2015 liability. 

Even more good news: Congress even passed a few tax breaks last year that will help you, and this year’s tax-filing deadline is later than usual, on April 18 (pushed back because April 15 is a holiday, Emancipation Day), so you’ve got even more time than usual to try and shave a few Benjamins off what you owe. Here’s how. 

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MANEUVER 1: Open up a last-minute IRA 
You’re probably sick of hearing that you aren’t saving enough for retirement. While that’s probably the case, I’ll spare you the same old lecture and offer you yet another reason to start saving: Uncle Sam will cut your taxes when you put money into an Individual Retirement Account. The IRS allows you to contribute up to $5,500 per year ($6,500 if you are over 50), and you can then reduce your taxable income by that amount. To oversimplify a bit, if you earn $100,000 a year and deposit $5,000, the government will tax only $95,000 of your income. That could knock about $1,250 off your tax bill. 

Low-income savers get an added bonus: If you’re single and made less than $30,501, you’re eligible for the “saver’s credit” of up to $1,000 in addition to the tax break. “It allows you to double-dip,” says Lisa Greene-Lewis, CPA and tax expert at TurboTax, who says only one out of four people who are eligible actually claim this credit. To get the tax savings on your current return, make sure you tell the IRA administrator (Fidelity, Schwab, or whichever firm the account is with) that the contribution is for the 2015 tax year. Then deposit the money by April 18. 

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MANEUVER 2: Sock away some dough in a Health Savings Account
If your health-insurance plan has an annual deductible of more than $1,300 ($2,600 for family coverage), you can pair it with a Health Savings Account. This is like an IRA but for doctors’ bills, except you don’t have to wait for retirement to spend it. You can deposit up to $3,350 for an individual ($6,750 for a family) and deduct that amount from your taxable income. You can withdraw the money at any time to pay for medical expenses. Unlike flex-spending accounts you may have through your employer, these are not “use it or lose it” accounts. You can even invest the money, let it grow, and tap the account years from now. Note: Make the deposit in the HSA by April 18 in order to reduce your 2015 tax bill. 

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