Wednesday, March 31, 2010, AM | Leave Comment
Two more weeks till April 15. Most of folks will have filed their 2009 taxes unless some requested the 6-month automatic extension.
Everyone wants to look for ways how to lower the tax burden on their income. IRA is one such benefit to do just that.
You have till April 15 to still contribute to an IRA account. The benefit is two-fold: Not only do you have the potential to reduce the amount of federal tax you owe, but you may also increase your savings for retirement.
How much can you contribute?
In these uncertain times, if you still can afford it, most experts suggest to contribute to an IRA account. A 2009 traditional IRA contribution of $5,000 is fully tax deductible for married couples filing jointly earning less than $89,000 annually.
Roth IRA contributions, on the other hand, are never tax deductible. However, contributing to a Roth IRA by the April 15 deadline may benefit your retirement savings. It has tax-free earnings growth potential and income tax-free withdrawals when certain requirements are met. Talk to your financial and tax adviser.
A catch-up provision allows those age 50 and older by 12/31/2009 to contribute an additional $1,000. The contribution limits are subject to certain phase-out rules. Consult your financial or tax adviser for the eligibility rules and limits in your particular situation.
Self-Employed & Small-Business owner
It’s not too late to establish and contribute to a SEP IRA for 2009. The contribution limit for 2009 can be up to 25% of compensation, with a maximum contribution of $49,000.
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