Although the IRS tax code seems to grow in complexity each year, taxpayers might like to think that IRA contribution rules would be fairly consistent with regard to contribution dates.? Unfortunately, consistency is not the case pertaining to various types of IRA?s.? Let?s take a closer look.
Traditional and Roth IRA?s.? The due date for taxpayers to open and contribute to an IRA is the tax filing date of your tax return, April 15, excluding the extension filing date.?
SEP-IRA.? The due date for self-employed individuals to both establish and contribute to this type of retirement plan is the tax return due date including extensions.? Depending on whether you are an incorporated entity or an individual, this date would be either September 15 or October 15, respectively.?
Solo 401(k).? The due date to establish this plan is December 31 (of the current tax year).? However, the taxpayer then has until the tax return due date, including extensions, to fully fund the retirement contribution.? Similar to a SEP-IRA, depending on whether you are an incorporated entity or an individual, this date would be either September 15 or October 15, respectively.?
SIMPLE IRA. ?The due date to establish this plan is October 1 (of the current year).? The salary deferral portion of contributions for the owner and employees is December 31.? The employer matching or safe harbor contribution must be contributed by the tax return due date, including extensions.? Similar to the previous two plans noted above, depending on whether you are an incorporated entity or an individual, this date would be either September 15 or October 15, respectively.?
Roth Conversion. ?The due date to convert an IRA to a Roth IRA is December 31 (of the current tax year).?
If your income will be too high for 2014 to contribute to a Roth IRA this year, consider making a non-deductible contribution to an IRA to convert to a Roth before December 31st.
This Fall, consider rolling your old retirement accounts held at a previous employer into your current employer’s 401(k) or 403(b) plan to consolidate your finances.
From IRS Tax Tips:
Your children may help you qualify for valuable tax benefits. Here are eight tax benefits parents should look out for when filing their federal tax returns this year.
1.?Dependents.? In most cases, you can claim your child as a dependent. This applies even if your child was born anytime in 2013. For more details, see Publication 501, Exemptions, Standard Deduction and Filing Information.
2.?Child Tax Credit.? You may be able to claim the Child Tax Credit for each of your qualifying children under the age of 17 at the end of 2013. The maximum credit is $1,000 per child. If you get less than the full amount of the credit, you may be eligible for the Additional Child Tax Credit. For more about both credits, see the instructions for Schedule 8812, Child Tax Credit, and Publication 972, Child Tax Credit.
3.?Child and Dependent Care Credit.? You may be able to claim this credit if you paid someone to care for one or more qualifying persons. Your dependent child or children under age 13 are among those who are qualified. You must have paid for care so you could work or look for work. For more, see Publication 503, Child and Dependent Care Expenses.
4.?Earned Income Tax Credit.? If you worked but earned less than $51,567 last year, you may qualify for EITC. If you have three qualifying children, you may get up to $6,044 as EITC when you file and claim it on your tax return. Use the EITC Assistant tool at IRS.gov to find out if you qualify or see Publication 596, Earned Income Tax Credit.
5.?Adoption Credit.? You may be able to claim a tax credit for certain expenses you paid to adopt a child. For details, see the instructions for Form 8839, Qualified Adoption Expenses.
6.?Higher education credits.? If you paid for higher education for yourself or an immediate family member, you may qualify for either of two education tax credits. Both the American Opportunity Credit and the Lifetime Learning Credit may reduce the amount of tax you owe. If the American Opportunity Credit is more than the tax you owe, you could be eligible for a refund of up to $1,000. See Publication 970, Tax Benefits for Education.
7.?Student loan interest.? You may be able to deduct interest you paid on a qualified student loan, even if you don?t itemize deductions on your tax return. For more information, see Publication 970.
8.?Self-employed health insurance deduction.? If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid to cover your child under the Affordable Care Act. It applies to children under age 27 at the end of the year, even if not your dependent. See IRS Notice 2010-38 for information.
You can also watch IRS YouTube Videos on these subjects:
Take a peak at Andrew’s article for Oncology Practice Management. Lots of tips to cut your 2013 taxes and advice for 2014.