If you have thought about contributing to an IRA for the 2018 tax year but have yet to do so, IRS reminded taxpayers today that anyone with a traditional IRA may be eligible for a tax credit or deduction on their 2018 tax return if they make contributions by April 15, 2019.
2019 IRA Contribution Deadline for 2018 Tax Returns
What is an IRA?
An IRA is a financial tool designed for employees and self-employed individuals to save for retirement. If you work, chances are you are eligible to contribute to an IRA.
To to be considered for the 2018 tax return, contributions must be made by April 15, 2019 (April 17, 2019 for residents of Maine and Massachusetts). While taxpayers can file their return claiming a traditional IRA contribution before the contribution is actually made, the contribution must then be made by the April due date of the return.
IRA vs Roth IRA
Contributions to a traditional IRA are usually tax deductible, and distributions are generally taxable. On the other hand, contributions to a Roth IRA are not tax deductible, but qualified distributions are tax-free. The Saver’s Credit may also be available for low- and moderate-income taxpayers making these contributions.
Generally, eligible taxpayers can contribute up to $5,500 to an IRA for 2018. For someone who was 50 years of age or older at the end of 2018, the limit is increased to $6,500.
The Saver’s Credit
The Saver’s Credit, also known as the Retirement Savings Contributions Credit, is often available to IRA contributors whose adjusted gross income falls below certain levels. For 2018, the income limits are:
- $31,500; single and married filing separate
- $47,500; head of household (certain criteria must be met for this filing status)
- $63,000; married filing jointly
To claim the Saver’s Credit taxpayers should use Form 8880, Credit for Qualified Retirement Savings Contributions.
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Any tax advice herein is based on the facts provided to us and on our interpretation of tax legislation as it reads at the time the advice is provided. Tax law is subject to continual change, at times on a retroactive basis and may result in incremental taxes, interest or penalties. We are not responsible for updating our advice for changes in law or interpretation after the date the advice is provided. Every tax situation is different. We are not responsible for the tax implications to any individual or entity that may act on this advice.