It’s Not Too Late To Lower Your 2025 Taxes Using This 6 Moves

If you haven’t filed your taxes, you have less than two weeks to get them done, but you also have the opportunity to lower your 2025 taxes.

Here are a couple of moves you can make now that will lower your 2025 taxes or future taxes for life.

Move No 1: File an Extension If Not Able To Meet The Tax Filing Deadline

Lower your 2025 taxes by not paying a penalty. If you are not able to file by April 15th, you can request an extension by completing IRS Form 4868. You can file this form electronically or mail it in.

The extension gives you 6 months to file your taxes, so this means you are good until October 15^th.

But it does not give you extra time to pay taxes if you owe any. So what you want to do is get an estimate of what you owe and send that payment to the IRS with the extension request.  

PS: To avoid a penalty for underpayment, you need to have paid the Safe Harbor amount.  

IRS defines Safe Harbor as follows, based on your income.

• • If your AGI is below $150,000 (or $75,000 if filing single), then you need to have paid 90% of the tax you owe for the current year, or 100% of the tax you owed for the previous tax year, or

    • You owe less than $1,000 in tax after subtracting withholdings and credits

  • If your AGI is over $150,000, then it’s the lower of 90% of the tax shown on the current year’s return or 110% of the tax shown on the previous year’s return.

If you haven’t paid that much tax, then it’s important that you pay what you owe before April 15^th, to stop more penalty accumulation.

     More Reading: Understand This Tax Vocabulary To Simplify Your Tax Filing

Move No 2: Make A Roth Contribution Before April 15^th

This is one way to ensure you save on taxes over your lifetime, not necessarily for 2025 taxes. Since it needs to be made before April 15^th, I’m including it here.

If your MAGI (Modified adjusted Gross Income) for 2025 was less than $150,000 (filing separately) or $236,000 (filing jointly), then you are able to make a direct Roth contribution of up to $7,000 if under 50.

If you are over 50, you can contribute up to $8,000 for 2025.

The income needs to be earned. The following are examples of earned income according to the IRS.

• • W2 (employed), tips, etc.

  • 1099 income (Contractor, self-employed, etc.

  • Minister’s housing allowance (Even though not considered taxable income)

  • Disability payment from an employer’s retirement plan

  • Spouse’s income (if married, but you don’t work).

  • Technically, the income needs to have been earned in 2025, but it could be earned this year, as long as you are within the earning guidelines.

If your income exceeds the numbers above, you can still contribute to a Roth IRA, but you have to do so in a two-step process known as a Backdoor Roth.

Caution On Roth IRAs – If On A Work Visa

If you are on a temporary work visa and are unlikely to get a green card that would allow you to stay in the country long-term, the Roth IRA may not be for you.

If you are likely to retire in a country that does not recognize it, it’s best to skip it altogether.

This is, despite everyone telling you it is the best retirement account.

If you have other IRA accounts (SIMPLE, Traditional, SEP, etc.), and you are doing the backdoor Roth, you are going to run into what’s called the Prorata rule, and you’ll have to pay taxes.

For more details on this, check out this episode, Unlocking The Backdoor: A Guide To Roth Contributions.

More Posts on Roth Accounts

I get a lot of questions on Roth IRAs – here are a couple more posts on the same.

Roth IRA, The Best Money Decision For Your Teen

How to Open a Teen Roth IRA Account in 6 Steps

The Top Roth IRA Mistakes To Avoid and How to Fix Them

Move No 3: Fund Your Traditional IRA

This will reduce your 2025 income and, in turn, lower your 2025 taxes.  To get the deduction (similar to a 401k plan at work), the following needs to apply.

You have no workplace retirement plan, and you are within the following income brackets

• • Filing single – $79,000 – $89,000

  • MFJ $126,000 – $146,000

  • MFJ, where your spouse is covered by another retirement plan, and you don’t have one. $236,000 – $246,000

Move No 4: Fund Your 2025 HSA Account

You have until April 15^th to fund your 2025 HSA (Health Savings Account). The 2025 contribution limit is $4,300 if you are filing single, and $ 8,550 if you are filing jointly or as head of household. You must have been enrolled in a high-deductible health plan.

The HSA will save you taxes as follows

• • It comes out before taxes, lowering your taxable income and, by extension, lowering your 2025 taxes.

  • Grows tax–free – so no future taxes

  • Comes out tax-free if used for qualified medical expenses.

Similar to the Roth, you won’t be able to use it outside of the US tax system – so if you are planning on leaving (especially if on a work visa), it’s worth examining your current situation first.

Move No 5: Fund Your Retirement Accounts If Self-employed

If you have Solo 401k, you are able to make two types of contributions.

Employee contributions – before Dec 31^st;

Employer’s contributions – before April 15th, and if you get an extension, you have until that day to file. In 2025, the total for both is $70,000, which will reduce the business’s taxable income. This reduces your taxes.

The SEP-IRA has similar rules, but you can contribute the full 2025 contribution limit, up to $70,000, in 2026 up to your filing deadline.

Move No 6: Fund Your 529 For A State Tax Deduction

There are 8 states that allow you to make the previous year’s contribution in the current year, as long as it’s before the tax deadline of April 15^th.

For example, South Carolina allows you to fully deduct your contributions and any rollovers into the plan if contributions are made before April 15^th.

Other states have their own nuances, but for those living in those states, it’s worth the effort to reduce your state taxes.

How Elgon Financial Advisors Can Help You Lower Your Taxes

Tax planning is something you want to do continuously to help lower your lifetime taxes, regardless of where you’ll be when you take the money out.

What works for your friend next to you is most likely not going to work for you.  If you are considering leaving the US or building long-term wealth in the US, we’d be very happy to walk this journey with you, as we help you lower your lifetime taxes.

As a fee-only Fiduciary advisor, our interests are aligned with yours, and everything we do is geared towards your interests.