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Make a Deductible IRA Contribution for 2018. It’s Not Too Late!

Do you want to save more for retirement on a tax-favored basis? If so, and if you qualify, you can make a deductible traditional IRA contribution for the 2018 tax year between now and the tax filing deadline and claim the write-off on your 2018 return. Or you can contribute to a Roth IRA and avoid paying taxes on future withdrawals.

You can potentially make a contribution of up to $5,500 (or $6,500 if you were age 50 or older as of December 31, 2018). If you’re married, your spouse can potentially do the same, thereby doubling your tax benefits.

The deadline for 2018 traditional and Roth contributions for most taxpayers is April 15, 2019 (April 17 for those in Maine and Massachusetts).

There are some ground rules. You must have enough 2018 earned income (from jobs, self-employment or alimony) to equal or exceed your IRA contributions for the tax year. If you’re married, either spouse can provide the necessary earned income. And you can’t make a deductible contribution to a traditional IRA if you were 70½ or older as of December 31, 2018. (But you can make one to a Roth IRA after […]

By Linkenheimer LLP|2020-09-03T20:04:08+00:00April 2nd, 2019|deductions, ira, roth ira|0 Comments

529 Plans Offer Two Tax-Advantaged Education Funding Options

Section 529 plans are a popular education-funding tool because of tax and other benefits. Two types are available: 1) prepaid tuition plans, and 2) savings plans. And one of these plans got even better under the Tax Cuts and Jobs Act (TCJA).

Enjoy valuable benefits

529 plans provide a tax-advantaged way to help pay for qualifying education expenses. First and foremost, although contributions aren’t deductible for federal purposes, plan assets can grow tax-deferred. In addition, some states offer tax incentives for contributing in the form of deductions or credits.

But that’s not all. 529 plans also usually offer high contribution limits. And there are no income limits for contributing.

Lock in current tuition rates

With a 529 prepaid tuition plan, if your contract is for four years of tuition, tuition is guaranteed regardless of its cost at the time the beneficiary actually attends the school. This can provide substantial […]

By Linkenheimer LLP|2018-10-12T22:31:46+00:00October 12th, 2018|child, education credit, expensing, New Tax Laws, savings|0 Comments

Still Time to Contribute to an IRA for 2016

Available in one form or another since the mid-1970s, individual retirement arrangements (IRAs) are designed to enable employees and the self-employed to save for retirement. Contributions to traditional IRAs are often deductible, but distributions, usually after age 59½, are generally taxable. Though contributions to Roth IRAs are not deductible, qualified distributions, usually after age 59½, are tax-free. Those with traditional IRAs must begin receiving distributions by April 1 of the year following the year they turn 70½, but there is no similar requirement for Roth IRAs.

Most taxpayers with qualifying income are either eligible to set up a traditional or Roth IRA or add money to an existing account. To count for a 2016 tax return, contributions must be made by April 18, 2017. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the saver’s credit when they complete their 2016 tax returns.

Generally, eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was at least age 50 at the end of 2016, the limit is increased to $6,500. There’s no age limit for those contributing to a Roth IRA, but anyone who was at […]

By Linkenheimer LLP|2020-09-03T20:04:57+00:00March 20th, 2017|ira, irs|0 Comments

Charitable contributions from IRAs

Eligible taxpayers have until Wednesday, 12/31/14, to make Qualified Charitable Distributions (QCDs) from their IRAs. QCDs of up to $100,000 per year from IRAs are available to taxpayers who are age 70.5 or older. QCDs are not taxable, and they can be can’t be deducted as a charitable contribution. However, they can be counted as 2014 Required Minimum Distributions (RMDs) if made by the 12/31/14 deadline. Although this break was set to expire on 12/31/13, it was extended through 2014 by the recently enacted TIPA (Tax Increase Prevention Act).

Written by Mike Musson, CPA, Partner

By Linkenheimer LLP|2020-09-03T20:05:36+00:00December 30th, 2014|charity, ira|0 Comments