Well it’s that time of year again…TAX TIME
The time of year most people dread.
Tax time brings a lot of questions to my office about Roth IRA and Traditional IRA contributions, so I thought this would be a good forum to answer some of those questions for you.
GOOD NEWS!! Yes, you have until April 15, 2013, to make 2012 contributions to your Roth IRA or Traditional IRA accounts.
Are there limits to how much I can contribute to my Roth IRA or Traditional IRA accounts?
Yes, there are limits to the amounts you can contribute.
Maximum contribution amounts for 2012 were:
$5,000.00 if you’re 49 or under
$6,000.00 if you’re 50 or over
Maximum contributions for 2013 have been increased and are:
$5,500.00 if you’re 49 or under and
$6,500.00 if you’re 50 or over
How do I know if I qualify to make contributions to my Roth IRA or Traditional IRA account?
First, your household needs to have earned income, either W2 or Business income, in order to make contributions. Earned income is NOT Social Security or Pension income.
- If you are single, that means you must be earning income.
- If you are married and filing jointly at least one spouse needs to be making earned income. Even with just one spouse making earned income, both spouses to make contributions.
- If you are married and filing separate, you each need to be earning income.
Second, your household earned income must be greater than the amount you are planning to contribute. For example:
- If you are single and you earned $4,000, you can make a contribution up to but not exceeding $4,000.00. In order to max out your contribution, you would need to make $5,500 or $6,500 (exact amount determined by your age).
- If you are married and filing jointly and you earned $8,000, you can make contributions up to but not exceeding $8,000. In order to max out your contributions, you would need to make between $11,000 and $13,000 (exact amounts determined by your ages).
- If you are married and filing separate and you each earned $4,000, your maximum contributions would be up to but not exceeding $4,000 each. In order to max out your contributions you would each need to earn $5,500 or $6,500 (exact amount determined by your ages).
If you have questions about a Roth IRA or Traditional IRA, or to find out how these could benefit your specific situation, call our office now.