People have more time to tuck money into their IRA this tax season, now that the income-tax filing deadline has been postponed a month.
Almost two weeks after the Internal Revenue Service extended this year’s federal income-tax filing deadline to May 17, the tax-collection agency on Monday said the deadline for 2020 contributions to individual retirement accounts (IRAs) and health savings accounts (HSAs) is also May 17.
The 2020 contribution end dates for both types of accounts would have been April 15, like the income-tax filing deadline before it was pushed back.
A person under age 50 can contribute $6,000 to their IRA, and a person 50 and above can contribute up to $7,000. Those contributions might be fully or partially tax deductible, depending on the taxpayer’s income and their access to a retirement plan through their employer, according to IRS rules.
A person with a health savings account can contribute $3,550 for individual coverage and $7,100 for family coverage. Health savings accounts are paired with a high-deductible health plan, where the deductible is at least $1,400 for an individual and $2,800 for a family. A person’s contributions to the account are deductible.
The May 17 deadline is the end date to pay any taxes due in the 2020 tax year. A taxpayer can get an extension to file a return through Oct. 15.
The IRS nudged back other deadlines to May 17 from April 15, including the three-year deadline to file a tax return and obtain an unclaimed refund. Money that goes unclaimed past the three-year window reverts back to the Treasury Department, the IRS noted.
But the IRS reiterated Monday it was not postponing the first round of estimated 2021 tax payments. These payments are still due April 15, the agency noted.
Gig workers, freelancers and self-employed business owners are some of the people who pay four rounds of estimated tax payments. While employers regularly withhold money for income taxes from each paycheck, self-employed taxpayers have to pay taxes as they go, via estimated payments. Paying too little along the way might result in penalties.