3 ways to reduce your 2019 tax bill

Key Points

  • It’s not too late to save money on your 2019 taxes.
  • Paying less in taxes means you could have more money to save or invest.
  • Discuss these and other tax-saving strategies with your Ameriprise advisor and tax professional.

There’s still time to lower your 2019 tax bill. Discuss these three strategies with your Ameriprise advisor and tax professional before you file.

Contribute to a traditional IRA

Contributing to a tax-deferred retirement account such as a traditional IRA could lower your taxable income and grow your retirement savings at the same time. You have until July15, 2020, to make tax-deductible contributions for the 2019 tax year (depending on your income and eligibility).

Fund a health savings account (HSA)

Your contributions to an HSA before July15, 2020, are tax-deductible and can grow tax-free to save for medical expenses. HSAs provide three tax benefits:

  • Tax-deductible contributions
  • Tax-free growth
  • Tax-free withdrawals for qualified medical expenses

Consider itemizing deductions

Fewer people are choosing to itemize given the higher standard deduction enacted by the Tax Cuts and Jobs Act that was signed into law December 2017. If it makes sense based on your circumstances, itemizing deductions on your federal return can help lower your taxes if they add up to more than the standard deduction. In 2020 the standard deduction is $12,400 for single filers, $18,650 for heads of household, $24,800 married, filing jointly, and $12,400 for married, filing separately.

It might be worthwhile to review potential itemized deductions to see if they exceed the standard deduction. Unreimbursed medical expenses, interest expenses for mortgages up to certain limits and home equity debt, charitable contributions and state, local and property taxes are common expenses that you may be able to deduct if you itemize. Be sure to check with your tax professional or visit irs.gov for the specific requirements for each one.

Work with your Ameriprise advisor and tax professional

A lower tax bill could provide you with more money to save for financial goals. Speak with your Ameriprise advisor and tax professional to learn how you can take advantage of these and other smart tax strategies.