Yes, it is 2016 and any income or deductions you have after the first of the month must be claimed next year. Unless you are one of the experts who know this neat little trick. As part of any 2015 tax preparation strategy, you can sneak in some more contributions to your IRA to be claimed when you prepare your taxes this year. Not sure how? Check out the 4 contributions you can still make for your 2015 taxes. These contributions will be null for 2015 after April 15th of this year.
Know the limits
Before you do go ahead and contribute to your IRA, be aware of the limitations for last year. According to the IRS, “For 2015 and 2016, your total contributions to all of your traditional and Roth IRAs cannot be more than $5,500 or $6,500 if you’re age 50 or older.”
There are also limitations based on your filing status as follows:
Those who are married filing jointly or qualifying widow:
- If you made less than $183,000, you may contribute up to the limit
- If you made between $183,000 and $193,000 you may contribute a reduced amount (consult your bookkeeping firm)
- If you made over $193,000, you may not contribute
Those who are married filing separately who lived with their spouse at any time during 2015:
- If you made less than $10,000, you may contribute a reduced amount (consult your bookkeeping firm)
- If you made over $10,000, you may not contribute
Those who are filing as single, the head of household, or married filing separately who did not live with their spouse at any time during 2015:
- If you made less than $116,000, you may contribute up to the limit
- If you made between $116,000 and $131,000 you may contribute a reduced amount (consult your bookkeeping firm)
- If you made over $131,000, you may not contribute
1. Contribute to a Traditional IRA
You may contribute in this account up to your limit, and your contribution is deductible in your tax preparation for those who don’t have a workplace retirement plan. Those who do have a workplace retirement plan can still deduct the full amount from their 2015 taxes if they are:
1. Filing as single and earned less than $61,000
2. Filing as married and earned less than $98,000 together
These deductions phase out for singles earning between $61,000 and $71,000 and $98,000 and married couples earning over $118,000.
2. Spousal IRA
Speaking of those filing as married, those who have a spouse who doesn’t work can still contribute to a traditional or Roth IRA in their spouse’s name based on their earnings for 2015, assuming the couple will file their taxes jointly. This allows couples to essentially double their IRA savings even if they earn only the one paycheck. The spousal IRA is not considered a joint account by the IRS and is one that is in the name of the spouse. The limits are the same as for both types of (traditional and Roth) IRAs, but those who meet the earning requirements can make the deductible contribution.
3. SEP-IRA
Those who own their own business may have what is called a SEP-IRA and contribute to it regularly. They may also contribute up to the extended due date and deposit up to one quarter of their compensation up to $53,000 for the year 2015. This amount is expected to change in the coming years adjusted to the cost of living. However, the contributions for this IRA must be made in cash and not property.
4. Roth IRA
Okay, you won’t be able to get more deductions for 2015 if you contribute to a Roth IRA, but there are perks to contributing now rather than later. The advantage of doing this is that the funds grow without any tax and are withdrawn during retirement without having to pay fees on the gains. The maximum for contribution is the same as the traditional IRA, or $5,500 if you are under 50 and $6,500 if you are 50 or older.
Those who are married and filing jointly and make under $183,000 per year may contribute, with the next phase for those earning between $183,000 and $193,000. Those who file as singles or heads of household have the range between $116,000 and $131,000.
Houston Tax Preparation
And if you live in the area and are in need of a Houston tax preparation firm to help you, please contact me.