Can You Contribute to Your IRA Before The Tax Deadline?
If you’re looking for ways to reduce your taxable income and haven’t yet contributed to your IRA or Roth IRA, you may still have time to contribute to these accounts and add to your retirement savings. The IRS allows contributions until the tax deadline (for the 2024 tax year, this deadline is April 15, 2025).
Why should I maximize my contributions?
Maximizing contributions to your IRA can be a strategic tax advantage.
With traditional IRAs, contributions may be tax-deductible. However, withdrawals in retirement are taxed as ordinary income. If you have a Roth IRA, you can contribute to it if your modified adjusted gross income (MAGI) falls within certain limits depending on your filing status. Roth IRA contributions are after-tax, and the qualified distributions are tax-free.
Can I use my tax refund as a contribution to an IRA?
If you have a tax refund, you can apply all or part of it as a contribution. If it’s a partial allocation, you should use Form 8888; if it’s all of the refund, you can state that on your tax return.
Do catch-up contributions apply to IRAs?
The amount for contributions to an IRA for 2024 and 2025 is $7,000. However, if you are age 50 or older, you can contribute an additional $1,000, for a total of $8,000.
If I’m trying to decide between a Roth IRA and a Traditional IRA, which is right for me?
Each of these retirement accounts has benefits, so it’s best to discuss your options with a financial advisor to determine which one suits your financial needs.
How do I make a contribution to my IRA before the tax deadline?
Once you have ensured you can still contribute based on the limits and your filing status, you’ll want to specify that your deposit is for the previous year. If you do not specify that the amount is for the previous year, the amount will be counted toward the current year.
To avoid last-minute contributions, you can always set up an automatic monthly deposit into your IRA.
Tax Planning with Chatterton & Associates
Maximizing your prior-year IRA contributions before the tax deadline is a valuable financial strategy. Whether you contribute to a Traditional IRA for immediate tax savings or a Roth IRA for tax-free retirement income, taking full advantage of the allowable limits can significantly boost your savings. If you have questions about tax-advantaged retirement accounts, tax projections, or tax reduction strategies, our tax professionals are here to help.
Contact us to discuss how we can help with your tax planning needs.
