If you haven’t maxed out your Individual Retirement Account for 2021, here’s some good news: you still have time.

But if you’re considering a deduction to lower your tax bill, you need to know the rules, experts say.

The last chance for 2021 IRA contributions is the tax filing deadline, which is April 18, 2022, for most Americans.

You can deposit up to $6,000 for 2021 or $7,000 if you’re 50 or older, provided you’ve earned at least that much through employment or self-employment.

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“Anyone can contribute to a traditional IRA — you, me, Jeff Bezos,” said certified financial planner Howard Pressman, partner at Egan, Berger & Weiner in Vienna, Virginia.

However, the ability to waive IRA contributions depends on two factors: participation in workplace retirement plans and income.

An investor and spouse can be “in the clear” to write off their entire IRA contributions if both spouses don’t participate in an employer’s retirement plan, said Larry Harris, CFP and director of tax services. at Parsec Financial in Asheville, North Carolina.

However, the rules change if either partner has coverage and participates in the plan, including employee or company deposits.

For example, participation may include employee contributions, company matches, profit sharing, or other employer deposits.

For 2021, single investors using a workplace retirement plan can claim tax relief for their entire IRA contribution if their adjusted adjusted gross income is $66,000 or less.

Although there is still a partial deduction before they reach $76,000, the benefit disappears once they reach that threshold.

Married couples who file together can receive the full benefit with $105,000 or less, and their partial tax relief is still available before reaching $125,000.

There is an IRS chart covering each of these limits here.

Spouses who don’t work outside the home can also contribute based on the earning spouse’s income, in what’s called a spouse IRA, Pressman added.

“It also has income limits, but they are higher than those for workers covered by a plan,” he said.

Although some investors are not eligible for IRA contribution deductions, there are other options to consider.

Non-deductible IRA contributions are a popular choice because some investors may be eligible to convert the after-tax deposit into a Roth IRA, known as a “backdoor” maneuver, bypassing income limits.

While the strategy was on the chopping block last fall, it survived negotiations for the House Democrats’ social and climate spending plan. However, Build Back Better has stalled in the Senate and talks are ongoing.

Other options may include capping a workplace pension plan, including catch-up contributions for those age 50 and older, Pressman suggests.

After that, someone can consider investing in low turnover index mutual funds in a regular brokerage account.

“This account will not be subject to retirement rules, which will limit your access to funds, and when you receive distributions, your growth will be taxed at more favorable capital gains tax rates rather than tax rates. higher ordinary income from IRAs,” he added.

“Although you will have to pay capital gains and dividend taxes each year, using low-turnover index funds should keep those taxes to a minimum,” he said.