Photo of couple by a table with a laptop, taking steps to save on taxes this year.

You can still save on your 2021 taxes. Here’s how.

Last year is history. But opportunities to lower your 2021 taxes might not be. Three options may give you the chance to reduce the money you owe, increase your tax refund, and save on fees—even after the clock has turned past December 31.

Use the time until Tax Day, this year Monday, April 18, to trim however you can.

Graphic reminder to make your 2021 IRA contribution by April 15, 2022.

1. Reduce your tax bill and increase your refund: Contribute to an IRA.

In addition to building retirement savings, contributing to a traditional IRA could lower your taxable income, which in turn can boost any refund that’s coming your way. That includes any new IRAs that you start—even those you open after January 1 and contribute to until you file.

If you have a retirement plan through work, IRS restrictions affect deductions for traditional IRA contributions. Check out the IRS website to see if you may qualify for a full or partial deduction.

2. Avoid tax penalties: Take a Required Minimum Distribution (RMD).

When you reach age 72, you’re required by law to take a certain amount—an RMD—from retirement accounts each year. If you don’t, you’ll pay a penalty (in some cases as much as 50% of the total you were supposed to take out). If you don’t need the income, you can make a qualified charitable distribution (QCD) from certain IRAs to a qualified 501(c)(3) charity—and it’ll be tax free. Work with your financial professional to ensure you follow the rules for a QCD.

Graphic of a thumbtack. Tip: Need help calculating your RMD? Find a calculator at

3. Avoid tax penalties: File for an extension, if needed.

Last year, we enjoyed the luxury of time with an overarching tax deadline extension, but we wouldn’t count on one this year. To avoid penalties and interest, you have two options.

  • File by April 18. If you’re submitting electronically, do so by midnight this day. Or, if you’re mailing your tax return, the envelope must be addressed, postmarked, and in the mailbox by then.
  • File for an extension. That will get you some breathing room—until October 17, 2022. But be aware: An extension simply delays when you submit your return. If you have taxes due, there may be penalties. And if you miss the original April 18 file date and don’t file for an extension, you may face a late-filing monthly penalty of 4.5% per month of the tax owed and a late-penalty of 0.5% per month of the tax due.

Thumbnail of IRS form 4868.

Need to file for an extension? Read the requirements, then use IRS Form 4868 (PDF).

Next steps

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The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professional or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

Be sure to also confirm your State filing and payment deadlines as they may not align with the extended federal filing deadline.