There’s not much you can do about your income for last year, but you can still cut your tax bill. The best way to do that is to contribute to a retirement account. Here are several options depending on your situation.
If you were self-employed or earned any type of self-employment income, you can contribute to a Simplified Employee Pension IRA plan for 2012 and take a deduction. You can contribute to a SEP up until the filing deadline, including extensions, which is October 15. You can contribute up to 20% of your net self-employment income or a maximum of $50,000.
If you (or your spouse) had earned income for 2012, you can probably contribute to an IRA for last year. You have until April 15 to make a contribution for 2012. The maximum amount you may contribute to an IRA for last year is $5,000 (plus an extra $1,000 if you are at least age 50).
If you’re enrolled in a retirement plan at work, your IRA deduction can be limited based on your income. If your 2012 modified adjusted gross income (MAGI) was above $68,000 if you are single or $112,000 if married and filing a joint return, you will not receive a deduction for your IRA contribution.
The same deadline and contribution rules apply to a Roth IRA as well. However, if your MAGI was over $125,000 as a single filer or $183,000 on a joint return, you cannot contribute to a Roth. You can contribute to a traditional IRA and then convert into a Roth if you want to pay taxes now and receive tax-free distributions during retirement.
You can also look to invest in a Coverdell education savings account (ESA). You have until Tax Day to contribute. All beneficiaries must be under age 18. You won’t get a deduction, but you will get tax-free buildup inside the account. Withdrawals will be tax-free if you use the money on qualified education expenses. The max you can contribute is $2,000 per student per year. You cannot contribute if your MAGI is over $110,000 as a single and $220,000 filing jointly. In that case, you can give the money to your child who can contribute as the beneficiary, not the owner (which you will still be).