Glendale Accounting | IRAs
Did you want to contribute to your IRA but forgot to do it before the end of the year? Don’t worry, you still have time to contribute and get credit for the 2014 income tax year.
Individual retirement arrangements have been available in one form or another since the mid-1970’s. IRAs are designed to enable employees and self-employed people save for retirement outside of Social Security benefits. Contributions to traditional IRAs are usually deductible, but distributions, usually taken after age 59 1/2, are generally taxable. Contributions to Roth IRAs, however, are not deductible and qualified distributions, usually after age 59 1/2, are tax free. Those with traditional IRAs must start taking required distributions by April 1st of the year following the year they turn 70 1/2 but there is no requirement to take minimum distributions from Roth IRAs.
Taxpayers with qualifying income are either eligible to set up a traditional IRA or Roth IRA or contribute to an existing account. To be counted as a contribution to the 2014 income tax year, contributions must be made by April 15, 2015. In addition to being a great savings tool, contributions to a regular IRA are eligible for a deduction of up to $5,500 from the gross income. For taxpayers over the age of 50, the contribution limit is raised to $6,500. Taxpayers over the age of 70 1/2 are not eligible to contribute. Contributions for low to mid-income taxpayers may also qualify for the Saver’s credit.
The deduction for IRA contributions is phased out for taxpayers that are covered by a workplace retirement plan and whose incomes are above certain levels. The deduction is phased out for taxpayers with modified adjusted gross income of $60-70,000 for singles and $96-116 for married taxpayers.
If you have any questions or would like more information, feel free to contact us at Dusseau & Makris, PC, your Phoenix, CPA firm.