At this time of year many people who were getting a refund have already filed their tax return. It leaves the remaining majority of folks who, despite having withholdings, are still going to owe additional tax. We talk a great deal about tax planning and changing behaviors to achieve better outcomes in the future, but many are faced right now with a tax bill for the past (2018 tax year). So what can be done? Anything? The answer is YES! It’s actually simple and easy for most folks to substantially reduce the tax liability they are facing by opening a prior year IRA! It is one of the very few ways the IRS allows you to retroactively affect your taxes. What if you don’t have the cash for an IRA? You can turn assets you already own into a 2018 IRA with some paperwork, with nothing needing to be bought or sold. Let’s give you an example: Kevin and Cathy are facing a $3,900 tax bill even after having $12,000 withheld at work on his W2. He has a daughter in college, so there is no cash in the bank to put in an IRA for last year, or to pay the $3,900 tax bill. They do, however, have a brokerage account with E*TRADE with a few stocks they have purchased over the years. Kevin can simply do an online IRA application for both himself and Cathy (make sure it’s a 2018 application not current year). When he has account numbers, he can then transfer “in kind” any of the stocks from his regular brokerage account to the IRA without selling them. In a sense, they are taking them from the left pants pocket and putting them in the right pants pocket. The outcome…tada, a $13,000 IRA deduction, and they still own the same stocks! One thing to consider is that now they have locked up that stock until age 59.5. Another consideration is that stocks are subject to a capital gains tax, which is lower than ordinary income. Suitability of IRAs vs non-qualified stocks is not the point of this article. Anybody doing anything with finance should seek professional advice, which is the point of this article. If your tax preparer just says ,”It’s bad news”, then you should go to a tax planner and work through your options, but just because there is no cash in your checkbook doesn’t mean you should think that nothing can be done.