With Tax Day fast approaching, now is the perfect time to review strategies that can help reduce your tax burden while reinforcing your savings. Among the most effective, yet often overlooked tools are the Individual Retirement Account (IRA) and the Health Savings Account (HSA). Both offer unique tax advantages that can greatly enhance your financial health. Whether you're planning for retirement or managing healthcare costs, maximizing your contributions to these accounts before April 15, 2025, is a prudent step.
Contribute to Your HSA
HSAs present a triple tax benefit: contributions are tax-deductible, withdrawals for medical expenses are tax-free, and the funds grow tax-free. For the 2024 tax year, contributions should be made by April 15, 2025, with limits of $4,150 for individual coverage and $8,300 for family coverage. Those 55 or older can contribute an additional $1,000. HSAs serve as a versatile option for saving towards both immediate medical expenses and long-term healthcare needs. For instance, if left unspent, HSA funds can accumulate over time, potentially resulting in a substantial nest egg for future healthcare expenses.
Maximize Your IRA Contributions
The deadline to contribute to your IRA for the 2024 tax year is also April 15, 2025. Those under 50 can contribute up to $7,000, while those 50 and above can contribute $8,000. Maximal contributions can significantly bolster your retirement savings and provide potential tax deductions depending on your income and filing status. It's wise to check whether a Roth IRA or traditional IRA best suits your situation to make an informed decision.
As you consider these opportunities, consulting with Alex & Ashley at Next Bloom Wealth can clarify your eligibility and contribution limits. Be sure to act before the April 15, 2025 deadline to fully leverage these savings strategies. Double-check your account balances and make contributions sooner rather than later to avoid the last-minute rush.