Wait a minute? Isn’t the deadline for making an IRA or Roth IRA contribution the tax filing deadline, not including extensions? You bet your bottom dollar it is! Then how, you might ask, can you possibly make a 2011 IRA contribution on May 9, 2012 – well after the general filing deadline of April 17, 2012? We'll tell you!
Most tax returns are done, 1099-Rs have been received, 2011 contributions have been made, and 5498s will be out by the end of next month (May). What's left to be done? Only the double (and triple) checking. Did you make a contribution in 2012 for 2011? Double check now to be sure the IRA custodian coded it as a 2011 contribution. Also double check that it went into the correct account, IRA or Roth IRA, your account or your spouse’s account, IRA or non-IRA account. Now is the time to fix any mistakes, not next year.
Here are two questions that come up a lot at tax time: Can I do a conversion now for 2011? and Joe died last year. He had earned income. Can we make a contribution to his IRA or Roth IRA account for last year. Find the answers below.
Last week I said that some taxpayers may be forced to take funds from their Roth IRA to pay the income tax due on a Roth IRA conversion. Yes, you can take money out of your Roth IRA. Generally there is no income tax due on a distribution, but if you are under age 59 ½ you may owe the 10% early distribution penalty. Here’s the way it works.
Numerous tax changes are in store for individuals in 2012. It's very difficult, however, to write with any degree of certainty about those affecting your income taxes because Congress has shown a tendency to make retroactive changes at any point in time. A number of income tax provisions that affected individual tax payers expired at the end of 2011. See some examples below.
You will have income tax due if you went through with a 2010 Roth conversion, so make sure your tax return includes deferred income. Did you do a Roth conversion in 2010 and take the default option of deferring the income to 2011 and 2012?
IRS released its "Dirty Dozen Tax Scams for 2012" on February 16, 2012. Number one on the list this year - Identity Theft. We detail this problem and how you can protect yourself below.
In another installment of MarketWatch's video series, Andrea Coombes interviews Ed Slott and Jack Nuckolls about the complexities of IRAs and taxes, while asking a question many consumers are asking their financial advisor at this very minute: Is it time for a Roth IRA? This video walks you through the process along with the Roth conversion conversation every consumer should have with their financial advisor. This video is part of a three-video series.
In an interview with MarketWatch's Andrea Coombes, Ed Slott and Jack Nuckolls discuss strategies to reduce your tax bill before 2013. Taxes are going up (tax on investment income, 3.8% healthcare surtax, income tax rates for the highest earners are heading to 39.6%), and Ed provides several strategies you can use to avoid the uncertainty of future tax rates.
Ed Slott was interviewed by MarketWatch's Andrea Coombes in a multi-video discussion on IRAs, how to avoid a big tax hit and how to avoid the penalty-induced mistakes many individuals make. This first video features Ed and Jack Nuckolls in a discussion about IRA mistakes you don't want to make...unless you want to see penalties and plenty of taxes in your future.
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