Contributing to Your IRA by April 15 Could Lower Your 2019 Tax Bill
The tax deadline is quickly approaching. Are you looking to lower your 2019 tax bill?
Contributing to your IRA by April 15th could lower your tax bill for 2019.
The annual contribution limits for IRAs (both traditional and Roth) for 2019 is $6,000 for any working individual under the age of 50. Those over the age of 50 can contribute up to $7,000 each year.
These contributions might lower your taxable income if you have earned an income. Here are a couple examples:
Let’s assume you are single and earn an adjusted gross income (AGI) of $60,000. If you contribute the maximum of $6,000, you will only pay taxes on $54,000 of your income.
If you’re married, filing jointly and have an AGI of $98,000, you can both contribute up to $12,000 ($6,000 each) for 2019. You will pay taxes on $86,000, assuming you make the maximum contributions allowed under the law.
Traditional IRA contributions are non-itemized deductions, which means you can claim them on your return.
However, there are limits for who can deduct their IRA contributions based on a few different factors:
- If you make too much income, you might still be able to contribute to your IRA, but might be limited or disallowed deductions.
- If you’re married and not covered by a retirement plan, your AGI limits are higher. It’s always good to check with your financial advisor or accountant for clarification on these limits.
For more information, you can visit irs.gov. I encourage you to speak with a fiduciary financial advisor and your tax specialist. They can help you maximize the deductions you qualify for and make the most of your tax returns for 2019.