Investing in a retirement account is arguably one of the smartest ways you can use your money. While it’s quite admirable to put that tax return money into an IRA, people who wait to contribute to their IRA until after Tax Day could potentially be missing out on the benefits of contributing before they file for taxes this year. Here are some ways to make the most of your money when tax season rolls around.
- Put money into a traditional IRA: If you contribute to your IRA before Tax Day, you can claim it as a contribution for the previous year. This only applies to traditional IRAs; you can’t claim Roth IRA contributions.
- See if you qualify for the Saver’s Tax Credit: If your income falls between certain limits, you might qualify to take a tax credit for making contributions to your IRA or employer-sponsored retirement plan. The full list of income limits is available at the IRS website.
- Keep track of your receipts: You may receive Form 5498 each year, depending on the type of IRA you have. This form reports your IRA contributions. If you do not receive Form 5498, you may have to count your contributions manually. So, receipts may be crucial for you to calculate and claim your contributions on your taxes.
- Know your limits: If you or your spouse don’t have access to an employer retirement plan, you should be able to deduct your entire IRA contribution. If you or your spouse are covered by an employer-sponsored plan, you’ll have to check IRS Publication 590-A to see if your income and filing status qualify you for a partial deduction.
About the Author
Zina Kumok is a writer for TraditionalIRA.com and RothIRA.com specializing in personal finance. She started covering personal finance while blogging about paying off $28,000 worth of student loans in three years. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, Daily Worth and Time magazines.
The information in this article is current through tax year 2019.