[0:16] Here’s how you can get the IRS to contribute to your IRA!
[0:45] Are IRA contribution limits tax deductible?
[1:13] Here are your different IRA contribution limits over age 50 or if you’re under 50.
[1:46] When do you need to have the cash?
[2:07] Stay tuned for this month’s exciting topic!
Contributing to Your Self Directed IRA Before Tax Time
It’s tax season and we all have our fingers crossed, hoping for the best. What if I told you that you could get the government to help contribute to your IRA, would that be of interest to you? I’m sure many of you are aware that a contribution to your IRA results in a reduction in your tax liability. Now, as always, you should consult with a CPA or tax professional, but in many cases, a contribution will reduce your tax liability and allow you to put money that you would normally be sending to the government into your own individual retirement account. This is one of the most critical and beneficial times for you to consult a tax professional. This is your retirement we’re talking about; spend the time, money, and effort on managing it correctly so it will have collected every penny that was available to you by the time you’re ready to retire.
A Recap of IRA Contribution limits:
- If you’re under 50-years-old, you can contribute $5,500.
- If you’re over 50-years-old, you can contribute an additional $1,000 as a Catch-up Provision for a total of $6,500.
Depending on which tax bracket you’re in, you will receive some of that money back in the form of a refund, which will help fund your contribution. Now is the time to start preparing for your contribution because you will need to make the contribution to the IRA now and in about a month, the tax refund will be returned to you.
Don’t wait until April 14th and expect everything to run smoothly.
We’ll spend the month of March talking about tax preparation. Coming up in the next few weeks, we have: form 5498, form 1099s, and other tips for April 15th.
What would you think if I told you that the IRS would help make a contribution to your self-directed IRA? I’m sure a lot of you are already aware of this, and you need to speak to your CPA or tax professional about it.
However, as you get closer to April 15th, you can talk to your tax professional and there’s a good chance that if you make a contribution to your self-directed IRA or to any IRA, it will reduce your tax liability. Depending upon the tax bracket you’re in, you could make a contribution of $3000 or $4000 all the way up to $5500, which could save you a few thousand dollars on your tax liability.
In effect, you’re getting back some of the money that you make as a contribution to your IRA–that’s a neat thing. I know a lot of people probably already know this, but it’s just something to remind you because we’re getting closer to tax time. During this whole month of March, we’re going to be talking about getting ready for tax time because April 15th is the big day—it will be here before you know it.
Just to reiterate: on your contributions, if you’re under 50 years old, you can contribute $5500. If you’re over 50 years old, they allow you to do what’s called a catch-up provision, which should be another $1000 so you can contribute $6500.
If you contribute $6500 (and depending upon what tax bracket you’re in), you will get some of that money back in the form of your refund that will help to fund that contribution.
That’s an exciting thing and something that you probably already knew, but you may just not have thought about it. You can start preparing for that [contribution] because you’re going to have to have the cash to put in now and you may not get the refund back for a month or so.
You need to prepare for to make contributions to your IRA, if you choose to do so, and be ready so that you don’t go in on April 14th, like I usually do, and end up not being in a position to make the contribution that you need to make.
Start thinking about your IRA and your taxes now and watch the next few videos over the course of this month. We’re going to be talking about 5498s, 1099s and just getting ready for tax time. It’s going to be here before you know it.
I’m looking forward to talking to you again next week at Tuesday at 2:00.
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