IRA’s can be a great investment and tax savings tool, but as we move toward tax time, attorney mary king says there are five things you need to keep in mind. The first deals with maximum ira contributions. There were no changes from 2019 to 2020. if you are under 50 you can contribute up to six- thousand dollars. if you’re over 50 you can make a one thousand dollar catch-up contribution for a total of seven thousand dollars.
Next: Traditional IRA’s and roth IRA’s are taxed differently traditional IRA’s are available to everyone and allow most people to take a deduction for the amount they contribute. Of course, you’ll pay taxes on it when you take your withdrawal. With a Roth IRA, you can not deduct your contribution on your current tax return, but come retirement age, you can take withdrawals with no tax consequences.
The third thing to remember? You might not be able to contribute to a Roth IRA. There are income limits, so talk to your tax attorney about the cut-offs.
Number 4- you might *not be able to deduct your traditional IRA contribution. if you have a workplace-sponsored retirement plan or your spouse does, those deductions may be cut back or eliminated. And finally- remember you still have time to make an IRA contribution for 2019. The deadline is Tax day, April 15th 2020.