I owe $900 in taxes this year because I didn't have enough withheld during the year; is there anyway to reduce this amount?
I started filing my taxes for the year, and realized that I owe almost $900 in federal taxes. I owe $50 in state taxes. I'm 25 and my salary is in the $50,000-$60,000 range. I have a 401(k) that was rolled over from a Roth IRA, and an HSA, account. I don't think my tax situation is particularly complicated. I know that the large amount I owe to in taxes is because I didn't have enough tax withheld during the year. I'll be sure to sort that out for next year. Is there anything I can do now to reduce my tax burden for 2017?
Be sure your HSA contributions were deducted from your taxable income. In addition, you can still make a traditional IRA contribution for 2017 up until April this year. If you're a single filer, you're likely in the 25% marginal tax bracket for 2017. The max you can contribute to an IRA in 2017 is $5500. That would produce $1375 in tax liability savings. The max you would need to contribute to reduce the $900 in taxes to zero, would be (900/.25) $3600.
If you're in the 15% tax bracket you can do the same calculations with 15%.
Hope that helps.
You could contribute to a Traditional IRA for 2017, which would produce a tax deduction (up to $5,500). If you are in the 15% bracket, your tax liability would go down by about $825. Your state taxes should decrease, too (states treat the deduction differently, so it would depend on your state).