Take an IRA Deduction Now. Pay Later.
Review our previous blog on the below mentioned topics at: https://www.bas-pc.com/blog
Here is a tax planning tip for those who file their tax returns early and wish to contribute to a tax deductibleIRA, but do not have the funds to do so. Say you want to pay into an IRA to get a tax break but you don’t have the money? Take heart, there are ways to get around this. The IRS allows you to take the deduction now and pay later when you get your refund.
How it works
- Step 1: Prepare your tax return early in the year (early February). Run the tax return considering an income reducing contribution to a tax deferred IRA. If you do not have the funds to put into the IRA, but your tax return has a refund that can fund your contribution, you are ready for step 2.
- Step 2: File your tax return with the IRA contribution noted. File the tax return as early as possible to ensure your refund gets back to you prior to April 15th. E-file the return if at all possible.
- Step 3: Fund your IRA prior to April 15th. Tell your IRA investment firm you wish your IRA contribution to be for the prior year.
That’s it. You have now effectively had the income reduction benefit of your IRA contribution help fund the account through your tax refund read more...
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Client Name: John Gagliardi, Marlene's Dress Shop, Collingswood, NJ
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