Reminder: Contributing to Your IRA by April 15 Could Lower Your 2018 Tax Bill
Would you like to potentially lower your tax bill?
Contribute to your IRA by April 15th for a potentially lower tax bill before you file your tax return.
The contribution limit for IRAs (both traditional and Roth) for 2018 is $5,500 for any working individual under the age of 50. Those over the age of 50 can contribute up to $6,500.
These contributions might lower your taxable income if you are under the age of 70 ½ and are still earning an income. For example:
Let’s assume you are single and earn an adjusted gross income (AGI) of $60,000. If you contribute the maximum of $5,500, you will only pay taxes on $54,500.
If you are married, filing jointly and have an AGI of $98,000, you both can contribute up to $11,000 ($5,500 each) for 2018. You will only have to pay taxes on $87,000, assuming you make the maximum contributions.
Traditional IRA contributions are non-itemized deductions, which means you can claim them on your return.
There are limits, however, to 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 also 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 2018.