It’s April 14th, tomorrow is tax filing day, have you made all your contributions for 2007? Now’s your last chance!
IRA Contributions
You have until April 15th of the following year to make contributions for that tax year, so you have until April 15th, 2008 to make your contributions to a 2007 IRA. If you have online account access and a linked bank account, you can still hop online to make your contribution right now. If you have online account access but haven’t linked a bank account, you may not have enough time to go through the verification process, but you are not out of luck. If you mail a check and it’s postmarked before April 15th, you can still get the contribution characterized as a 2007 contribution.
Retirement Savings Tax Credit
You’ll have to file a 1040 or 1040A, or go with an online service like TurboTax that will handle it all for you, but you may qualify for a retirement savings tax credit. The tax credit works on a schedule based on income, with the ceiling being $26,001. If you earn more than $26,001 as a single filer or $52,001 as a married filing jointly then you can skip this paragraph. For everyone else, you can get a credit of up to 50% of your retirement contributions. For single filers, the 50% credit rate is for incomes of less than $15,500, 20% is between that and $17,000, 10% for those earning less than $26,000, and then nothing for anyone over.
Another point to know is that in the case of IRAs, only half of the maximum contribution can be counted towards calculating your credit. So for 2007, the max contribution was $4,000 but only $2,000 figures towards the credit, leaving a maximum credit of $1,000 for single filers.
Almost every recognized retirement account contribution counts from IRAs to 401(k)s to SIMPLES, SEP, 403(b), etc. For additional help, check out Form 8880 Credit for Qualified Retirement Savings Contributions or just use TurboTax. 🙂