If you made IRA contributions or you’re thinking of making them, you
may have questions about IRAs and your taxes. Here are some important
tips from the IRS about saving for retirement using an IRA.
1. You must be under age 70 1/2 at the
end of the tax year in order to contribute to a traditional IRA. There
is no age limit to contribute to a Roth IRA.
2. You must have taxable compensation to
contribute to an IRA. This includes income from wages and salaries and
net self-employment income. It also includes tips, commissions, bonuses
and alimony. If you’re married and file a joint return, generally only
one spouse needs to have compensation.
3. You can contribute to an IRA at any
time during the year. To count for 2013, you must make all contributions
by the due date of your tax return. This does not include extensions.
That means you usually must contribute by April 15, 2014. If you
contribute between Jan. 1 and April 15, make sure your plan sponsor
applies it to the right year.
4. In general, the most you can contribute
to your IRA for 2013 is the smaller of either your taxable compensation
for the year or $5,500. If you were age 50 or older at the end of 2013,
the maximum you can contribute increases to $6,500.
5. You normally won’t pay income tax on
funds in your traditional IRA until you start taking distributions from
it. Qualified distributions from a Roth IRA are tax-free.
6. You may be able to deduct some or all of your contributions to your traditional IRA. Use the worksheets in the Form 1040A or Form 1040
instructions to figure the amount that you can deduct. You may claim
the deduction on either form. Unlike a traditional IRA, you can’t deduct
contributions to a Roth IRA.
7. If you contribute to an IRA you may also qualify for the Saver’s Credit. The credit can reduce your taxes up to $2,000 if you file a joint return. Use Form 8880,
Credit for Qualified Retirement Savings Contributions, to claim the
credit. You can file Form 1040A or 1040 to claim the Saver’s Credit.
8. See Publication 590, Individual Retirement Arrangements, for more about IRAs.
For additional information contact a business and corporate attorney at the offices of AttorneyBritt.
IRS Circular 230 Disclosure:
To ensure compliance with requirements imposed by the IRS, we inform
you that any
tax advice contained in this communication (including any attachments)
is not intended or written to be used, and cannot be used, for the
purpose of (i) avoiding penalties under the Internal Revenue
Code or (ii) promoting, marketing or recommending to another party any
transaction or matter addressed herein.
No comments:
Post a Comment