Sunday down-to-the-wire tip: Fund that IRA!

April 15th, 2012 by Joe Kristan

Counting today, filing season has three more days.  One of the few tax moves you can make between now and then is to fund an IRA.  If it is a traditional, deductible IRA, you can get a current deduction and save taxes on the return due Tuesday.  If it is a non-deductible traditional IRA, you have no deduction, but earnings accumulate tax free.  If you fund a Roth IRA, you get no deduction now, but if you leave the money in long enough, the earnings will never be taxed.

You can only make IRA contributions to the lesser of $5,000 or your wage and self-employment income.  If you turned 50 by the end of 2011, add $1,000 to the $5,000 limits.  If you file a joint return, a non-earning spouse can use up to $5,000 (or $6,000 if 50 or older) of the other spouse’s income in excess of the earning spouse’s limit to support a “spousal IRA” contribution.

Income limits apply for deductible traditional IRAs if you are covered by a retirement or profit-sharing plan at work.  Different income limits apply to Roth IRAs. Check the limits at the links before you pull the trigger.  And remember, the April 17, 2012 deadline for funding 2011 IRAs is NOT extended if you extend your return.

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