Traditional IRA Contribution – Now for 2011
by Roger Chartier
Most people figure that they have already sealed their fate concerning any additional deductions for 2011
but here’s the deal… If you are covered by a retirement plan where you work this isn’t for you.
Those who do not have a retirement plan where they work or are self-employed, can take a bigger deduction by contributing to a traditional individual retirement account up until April 17 the tax deadline.
So to be clear, before April 17 2012 you can get a deduction on your 2011 taxes.
If you are over sixty years old you can contribute up to $6,000.00.
If you are under fifty years old you can contribute no more than $5,000.00 You can’t deduct more than your contribution so if you earned $4,000.00 in 2011 you can’t put $5,000 in and take a $5,000 deduction. You can only deduct $4,000 the most.
I.R.A. – Married people get a better deal
If you get married during the year 2011 and one spouse does not work the amount that each can contribute is figured as the total taxable compensation that the working spouse received minus the amount of that contribution.
Here’s an example for a couple who are under 50, Jane earned $30,000 and Bob stayed home and played World of Warcraft all day, every day and never worked.
He could still also get a $5,000 deduction for a $5,000 contribution, from Jane’s income of course even though the big galoot never worked or even tried to get a job.