If you are still considering making Individual Retirement Accounts (IRA) adjustments, you do not need to hurry because you can make adjustments up until the end of the tax season next year. After the holiday season is over, you should take a look at the IRA limits for 2014 and other rules that will impact your 2014 taxes. If you want to open an IRA, then also you can use these tips to maximize your savings without falling out of compliance.
Your IRA contribution for 2014 must not exceed $5,500. If you are 50 years old or older, then the maximum limit is $6,500. You can make an IRA contribution up to April 15, 2015, for it to count for your 2014 taxes. If you make contribution that exceeds the IRA limit for 2014, then you will need to pay a 6% tax on the amount that is in excess.
Even if you have contributed in excess, if you remove the excess amount before April 15, 2014, you can avoid the 6% tax. If you take an extension to pay, then it also applies to taking out excess contributions from IRAs.
If you file jointly, you get an additional benefit. Even if only one of you has taxable income, both you and your spouse can contribute to an IRA.
If you are 70½ and older, then you must take a required minimum distribution (RMD) from your traditional IRA. If you have multiple IRAs, then you will need to calculate the RMD for each account separately. However, you can take out the total amount from one or more accounts.
If you do not take out the RMD from your IRAs, then you face a 50% excise tax on the RMD amount that you did not take out. You are not required to take out RMD from your Roth IRA.
If you contribute to IRA or another retirement plan, you may check if you qualify for the saver’s credit. The maximum credit allowed for individuals is $1,000. For married couples filing jointly, it is $2,000.
Labels: IRS, Tax Code, Tax Filing, Tax News, Taxpayers