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5 retirement tax moves to make in March


March is supposed to come in like a lion and go out like a lamb, at least according to the old weather saying.

Feline ferocity also could help when it comes to taxes. We need that predatory focus since we only have around six weeks — less due to that dang hour we'll lose this month to Daylight Saving Time! — until our federal (and state, for some folks) returns are due.

That aggressiveness also could pay off long after the annual tax deadline, thanks to tax breaks that can help add to your post-work savings.

So let's not waste any more valuable time. Here are five retirement-related tax moves to make in March that could help some filers reduce their 2022 tax bills, and also make for their future retirements more comfortable.

1. Open or add to your IRA. You can put money into any IRA, traditional or Roth, by Tax Day — that's April 18 this year — and designate it as applying to the prior tax year. If you don't have an IRA, you also have until the April deadline to open one and use it for the previous year's contributions.

For 2022, you can contribute up to $6,000, or $7,000 if you're age 50 or older. That is, of course, contingent on you having earned that much.

In certain financial and employment situations, traditional IRA contributions can be deducted.

The biggest tax break is available to filers and, if married, their spouses, who don't have workplace retirement plans. Income thresholds, known as your modified adjusted gross income, or MAGI, kick in if either spouse participates in a job-sponsored plan.

The following IRS table shows how much a traditional IRA addition can help lower your 2022 tax liability if you're covered by a retirement plan at work.

If Your
Filing Status Is

And Your MAGI Is

Then You Can Take

Single or
head of household

$68,000 or less

a full deduction up to the amount of your contribution limit.

more than $68,000 but less than $78,000

a partial deduction.

$78,000 or more

no deduction.

Married filing jointly or
Qualifying widow(er)

$109,000 or less

a full deduction up to the amount of your contribution limit.

more than $109,000 but less than $129,000

a partial deduction.

$129,000 or more

no deduction.

Married filing separately

less than $10,000

a partial deduction.

$10,000 or more

no deduction.

If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the "Single" filing status.


2. Contribute to a spousal IRA. Where couples' incomes and workplace plan situations negate traditional IRA tax deductions, they still might be able to achieve some savings through a spousal IRA

For jointly filing couples, a spouse that didn't have any taxable income might be able to contribute to an account known as the Kay Bailey Hutchison Spousal IRA. It was named after the former U.S. Senator from Texas who championed the plan.

As long as the other spouse had income, that amount is used to calculate eligibility and contribution limits.

Each spouse can put money into the Kay Bailey Hutchison IRA up to the current limits, which are the same as other IRAs. Again, for 2022, that's $6,000 per account, or $7,000 if you're age 50 or older.

Note, too, that as with other IRAs, the total spousal IRA contribution cannot be more than they earn. That's the couple's taxable compensation reported on their joint return.

If the working spouse didn't participate in a workplace retirement plan, all the spousal IRA contributions will be deductible.

But if the working husband or wife is covered at work, income limits, as with traditional IRAs apply. If the MAGI reported on your 2022 joint tax return is no more than $109,000, you can deduct the full amount of your spousal contributions. That deductibility begins to phase out between $109,000 and $129,000. You get no spousal IRA deduction if your MAGI is more than $129,000.

You can read more about spousal IRAs in IRS Publication 590-A.

3. Contribute to your self-employment retirement account. If you are your own boss, even if just some gigs to supplement your regular wages from a company, you can open a retirement account for that money.

While some self-employed retirement accounts must be established by the end of the tax year, other are more flexible. Simplified Employee Pensions (SEPs), Keough plans, and defined benefits plans may be established and contributions made up to the due date for filing a return.

Even better, if you get an extension to file your tax return, you have until that new mid-October (it's Oct. 16 this year, due to the 15th falling on a Sunday) deadline to open and contribute to these accounts and have it count toward the prior tax year.

4. Claim the Saver's Credit. If you contribute to your retirement account, be sure to check out the Saver's Credit. This tax break, which is a dollar-for-dollar reduction of any tax you owe, isn't available to everyone.

You have to be at least age 18 to claim this credit. It's also income restricted so that lower- and middle-income savers get the most benefit.

But if you qualify you could get a tax credit of up to $1,000 per person. For married couples who add to their individual nest eggs, that $2,000 on their joint return. And it bears repeating. Those amounts are directly subtracted from any tax you owe.

For 2022 tax returns, you can get the full Saver's Credit if, as a single filer, your adjusted gross income was $20,500 or less. The credit is reduced if you make more, phasing out completely if you made more than $34,000.

Head of household filers must make no more than $30,750 to get the maximum Saver's Credit amount. These taxpayers who support other family members can't claim it at all if their income last year was more than $51,000.

Married filing jointly couples who made $41,000 in 2022 can get the full Saver's Credit on this year's filing. Their credit amount is reduced incrementally and eliminated for couples who make more than $68,000.

5. Make HSA contributions. Health savings accounts, or HSAs, are a triple tax-saving threat. You get a write-off for contributions, tax-free growth in the account, and you don't owe any tax on withdrawals used to pay qualified medical expenses.

As with IRAs, if you haven't maxed out your HSA contribution, you have until Tax Day to put money into the account for the prior tax year.

HSAs even have a retirement component. Once you turn 65, you can use the money for non-medical expenses with no tax penalty at all. The only tax consideration here is the payment of tax, at ordinary rates, on the withdrawals that don't go toward health care.

Sounds great, right? It is, but only for folks who have high deductible health plans (HDHP). You must have an HDHP to open an HSA.

But if you have this type of medical insurance, for the 2022 tax year you can contribute as an individual taxpayer up to $3,650 to your HSA. Family HDHP coverage will let you put up to $7,300 in an HSA. Policy holders who are 55 or older can sock away an additional $1,000 for the tax year.

More March Tax Moves: Wow! Working on your retirement is almost as exhausting as plain old work. But it's worth it, now and in the future.

And if you're set as far as retirement, then check out some other March tax tasks over in the ol' blog's right column. As usual, these pieces of tax advice are listed under the countdown clock that's keeping track of the time remaining until to Tax Day 2023.







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