This Tax Deduction Could Save You Big Bucks

Do you dread having to write a big check to the IRS each spring? Like everyone else, you probably search for every tax deduction and credit that could help you lower your bill. But for most of these tax breaks to count, you have to wrap them up by December 31 of the prior year. Otherwise you miss out until the following tax season.

Luckily, there is one important tax deduction that you can access up until the day you file your taxes. And it also helps you save more for retirement.

If you open and fund an Individual Retirement Account (IRA) by April 18 of this year, you can count your contributions on your 2015 tax return. You can earn a valuable tax deduction and save for retirement at the same time!

For 2015, the IRA contribution limit is $5,500 for singles, or $11,000 for couples (you can each fund your own IRA). Those over age 50 can make additional “catch-up contributions” of an additional $1,000 per year.

An IRA allows you to set aside pre-tax dollars for retirement, and you won’t owe taxes on the money until you take distributions in retirement. You can accomplish two goals at once; lower your overall tax burden, and save money for a more stable retirement. An IRA is a great option for those of you whose employers do not sponsor a 401(k) plan, or if you have already maxed out those contributions and wish to save even more for retirement. An IRA can also be a good idea for those who are self employed.

When you log into your IRA account to make a contribution, just remember to select the correct year for which you want your contribution to be counted. Select “2015” to max out your tax deduction this spring.

If you don’t already have an IRA, you can open one with your bank or a brokerage firm – often for as little as 500 dollars to start.

Even if you can only contribute a small amount to your IRA each year, remember the power of compounding interest. Over the years, taking advantage of this valuable tax deduction can also provide much-needed retirement income.

Give us a call for more information on Independent Retirement Accounts. And remember: In order to use this deduction on your 2015 tax return, make your contribution by April 18.