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Prudent Steps for After January 1

1.  Contribute to Retirement Accounts

If you haven't already funded your retirement account for 2014, do so by April 15, 2015. That's the deadline for a contribution to a regular IRA, deductible or not, and a Roth IRA. However, if you have a Keogh or SEP and you get a filing extension to October 15, 2015, you can wait until then to put money into those accounts.

Making a deductible contribution will help you lower your tax bill this year. Plus, your contributions will compound tax-deferred.

To qualify for the full annual IRA deduction in 2014, you must either 1) not be eligible to participate in a company retirement plan, or 2) if you are eligible, you must have adjusted gross income < $60,000 for singles or < $96,000 for married couples filing jointly. If you are not eligible for a company plan but your spouse is, your traditional IRA contribution is fully deductible as long as your combined gross income does not exceed $181,000.

For 2014, the maximum IRA contribution you can make is $5,500 ($6,500 if you are age 50 or older by the end of the year). For self-employed persons, the maximum annual addition to SEPs and Keoghs is $52,000 for 2014.

Although choosing to contribute to a Roth IRA instead of a traditional IRA will not cut your 2014 tax bill -- Roth contributions are not deductible -- it could be the better choice because all withdrawals from a Roth can be tax-free in retirement. Withdrawals from a traditional IRA are fully taxed in retirement. To contribute the full $5,500 ($6,500 if you are age 50 or older by the end of 2014) to a Roth IRA, you must earn $114,000 or less a year if you are single or $181,000 if you're married and file a joint return.

Savings: Your savings will vary. If you are in the 25 percent tax bracket and make a deductible IRA contribution of $5,000, you will save $1,250 in taxes the first year. Over time future contributions you make will save you thousands, depending on your contribution, income tax bracket, and number of years you keep the money invested.

2.  Make a Last-Minute Estimated Payment

If you didn't pay enough to the IRS during the year, you may have a big tax bill staring you in the face. Plus, you might owe significant interest and penalties, too.

How could that happen? Withholding on your paycheck may be out of whack, or you may have received a big gain from selling stock. According to IRS rules, you must pay 100 percent of last year's tax liability or 90 percent of this year's tax or you will owe an underpayment penalty. If your adjusted gross income for 2013 was more than $150,000, you have to pay more than 110 percent of your 2013 tax liability to be protected from penalties.

If you make an estimated payment by January 15, though, you can erase any penalty for the fourth quarter, but you still will owe a penalty for earlier quarters, if you did not send in any estimated payments back then. But if your income windfall arrived after August 31, 2014, you can file Form 2210, Underpayment of Estimated Tax, to annualize your estimated tax liability and possibly reduce any extra charges.

Savings: Interest and penalties on tax underpayments.

3. File and Pay on Time

If you can't finish your return on time, make sure you file Form 4868 by April 15, 2015. Form 4868 gives you a six-month extension of the filing deadline to October 15, 2015. On the form, you need to make a reasonable estimate of your tax liability for 2014 and pay any balance due with your request.

Timely requesting an extension is especially important if you end up owing tax to IRS. If you file and pay late, IRS will add a late-filing penalty of 4.5 percent per month of the tax owed and a late-payment penalty of 0.5 percent a month of the tax due. The maximum late filing penalty is 22.5 percent and the late-payment penalty tops out at 25 percent. By filing Form 4868, you stop the clock running of the costly late-filing penalty.

Savings: Interest and penalties.