You might have seen the news that the federal income tax filing deadline was extended to May 17. If you’re like me — it still feels like mid-January, and I’m wondering where the past two months went — that’s good news. It gives us a little more time to do some last-minute tax planning.

Of, if you’re the responsible sort and have already filed your tax return for the year, we can do a little strategizing for tax year 2021.

We focus mostly on the stock market here on Money & Markets. But tax planning may be the single most important part of your overall financial plan. It doesn’t do you a lot of good to generate market-crushing returns if you end up giving most of the gains to the taxman.

Let’s go over a few tax tips to protect your stock market gains.

3 Tax Tips After the Extension

The Low-Hanging Fruit for Taxes

retirement-401k-small business 401(k) mistakes 401(k) matching rules 401(k) strategy tax tipsNot all tax-saving schemes are elaborate. Some are remarkably simple. I would argue that the single best tax shelter created by Congress is the humble 401(k) account.

If you work for a company, there’s not much you can do at this point that will help you on your 2020 tax return. But you can get a head start on next year’s return by bumping up your contributions. If you got a raise last year, try to continue living on your old salary and divert the increase to your 401(k). Apart from the matching, the contributions will make a noticeable impact on your tax bill. If you’re in the 24% tax bracket, every dollar you put into your 401(k) reduces your tax bill by 24 cents.

So if you’re not maxing out the full $19,500 (or $26,000 if you’re 50 or older) you’re paying taxes you don’t need to pay.

If you’re self-employed, the numbers are even better. You can contribute up to $57,000 to a SEP IRA or individual 401(k) plan. You have to set up an individual 401(k) before the end of the calendar year (though you can keep funding it until the tax filing deadline).

You don’t need a CPA to help you do these, by the way. It’s never a bad idea to have professional help, of course, but these are standardized accounts that a non-professional can set up on their own.

Don’t Forget Your HSA

I’ll resist the temptation to go into a political rant here. But one of the unfortunate trends of the past two decades is that now virtually every American with health insurance has a high-deductible plan.

It means we’re all paying more out of pocket. But the upside is that we can turn this into a pretty solid tax break, which leads me to my second tax tip.

Check to see if you have a health savings account (HSA) tied to your health insurance. It’s entirely possible your employer set one up for you without you realizing it.

HSAs allow you to pay out-of-pocket health expenses with pre-tax money. That’s nice and all. But you can also use your HSA as what I call a “spillover” IRA. If you’re already maxed out your 401(k) or IRA and have extra cash on hand, consider dumping it in the HSA account. In 2020, you can contribute $3,550 as an individual or $7,100 as a family. And if you don’t use it for health expenses, you can invest in it the same way you’d invest in an IRA.

The rules are a little different. Tax-free withdrawals other than for medical expenses are not permitted until age 65 as opposed to age 59 ½. But there are also no required minimum distributions (RMDs), which gives you the flexibility to let the funds compound a little longer.

Once you’re 65, your HSA is, for all intents and purposes, just another IRA, albeit one without RMDs.  You can cash it in to buy a Maserati if you want.

Keep Track of Your Health Expenses

And finally, go through your credit card statements and receipts for anything medical-related in 2020. It doesn’t have to be something major like heart surgery. Even basic things like a teeth cleaning or an eye exam for new glasses count here.

Add up every penny. Because if the total exceeds 7.5% of your adjusted gross income, it becomes tax-deductible. Just be sure to hang on to your receipts on the slim chance you get audited.

I’m no ideologue. I pay my taxes with the understanding that this is the price we pay to live in a civilized country. I’ve spent enough time in underdeveloped countries to truly appreciate what we have here.

But all the same, I’m no sucker. I’m not paying a single red cent I don’t have to.

And keep checking Money & Markets. I’ll share a few more tax tips with you in the weeks ahead.

To safe profits,

Charles Sizemore_Sig

Charles Sizemore is the editor of Green Zone Fortunes and specializes in income and retirement topics. Charles is a regular on The Bull & The Bear podcast. He is also a frequent guest on CNBC, Bloomberg and Fox Business.

P.S. Check out The Bull & The Bear podcast every week for more picks from Adam, Charles and me. You can listen on Apple PodcastsSpotifyAmazon and Google Podcasts. You can also catch episodes on our YouTube channel here.