Lets say you’re around 73 years old and still work full time, could you still contribute to your IRA?
No you cannot. Contributions can’t be made to an IRA beginning the year you turn 70. There is no exception.
What if you participated in a work place 401(k) could you contribute to an IRA then?
Yes you could! the deductibility of your IRA contribution may be affected depending on your filing status and earned income for the year. Now lets say you aren’t eligible to contribute to a Roth IRA because of your income. Is it preventing you from converting your traditional IRA to Roth IRA? No it isn’t, Anyone can convert a traditional IRA to a Roth IRA regardless of their income level in the year of conversion. What if last December you pulled out your IRA so really you didn’t have an IRA balance on December 31,2015 to calculate your RMD. Does this exempt an RMD for 2015? No it doesn’t exempt, for purposes of RMD calculations all IRA assets “in transit” must be considered.
How are distributions received from an IRA taxed?
Inherited IRA will be taxed at your ordinary income tax rate for the year in which you received it. Lastly what is the deadline for making a 2015 IRA contribution? It will be April 15, 2016, its the same deadline for filing your tax return without extensions.
That’s all for IRA scenarios thanks to America’s Tax Solutions.
Source: America’s Tax Solutions Photo: Pexels
Charitable contributions are donations or a gift to or for the use by a qualified organization. It is voluntary and made without getting or expecting to get anything of equal value.
Qualified organizations are nonprofit groups that are religious, charitable, educational, scientific or literary in purpose or that work to prevent cruelty to children or animals. In order for donations to be tax deductible the organization has to be qualified. Note: Gifts to individuals are never deductible as charitable contributions even if the individual is associated with a charitable organization.
If the receipient of funds received uses the money for medical expenses, the receipient can deduct the cost of medical expenses within IRS tax guidelines. Fund used to help pay for other personal expenses are not deductible. There is no tracing rule under the IRC section 213 that requires tracing the source of the funds to some taxable source before being able to deduct the expense as a medical expense.
Source: The Tax Book Photo:Pexels
Failure to review your retirement planning documents can be a DISASTER. It can really hurt your beneficiaries, this is a common mistake.
Recently a client discovered that her new husband hadn’t updated his beneficiary forms for his retirement plans. Unfortunately the client didn’t find out until he passed away unexpectedly and a quick review of his important documents revealed this mistake.
The good thing is that her deceased husband’s beneficiaries were to leave those assets to his wife and all the beneficiaries plan to honor his wishes the best way they can. But not all stories end this way, in fact loved ones are often caught in the middle of family battles and mired in litigation lasting several years.
Marriage, divorce, birth or death can occur at any time. Tax laws change or are updated on a routine basis. Even though you cannot predict what will happen, you can update your retirement plans as needed when any life changing event occurs or new legislation goes into effect that impact you or your loved ones.
Review your beneficiary forms, custodial agreements and anything else you may have in place to provide for and protect your loved ones at least once a year. An annual review will help ensure your assets will still flow the way you want them to and in the most tax efficient manner. Your retirement distribution expert and tax professional can help you with these types of reviews. These reviews should be FREE services so don’t hesitate to schedule an appointment with your personal advisor(s) if you need guidance or assistance.
Source: America’s Tax Solutions Photo Credits: Pexels
The IRS has announced initial plans for processing tax returns involving the Earned Income Tax Credit and Additional Child Tax Credit during the opening weeks of the 2017 filing season. The IRS is sharing information now to help the tax community prepare for the 2017 season, and plans are being made for a wider communication effort later in the summer and fall to alert taxpayers about the changes that will affect some early filers.
This action is driven by the Protecting Americans from Tax Hikes Act of 2015 that was enacted into law on December 18, 2015. Section 201 of this new law mandates that no credit or refund for an over payment for a taxable year shall be made to a taxpayer before February 15 if the taxpayer claimed the earned income tax credit or additional child tax credit on the return.
Source:The Tax Book Photo:Pexels
If you own or are the beneficiary of an IRA, 401(K) or other retirement plan, review this to avoid an RMD ( required minimum distribution) error. Failure to take at least the RMD amount each year results in a 50% penalty by the IRS !
Photo : https://www.flickr.com/photos/stevendepolo/5437288053 Source: www.irs.gov
Twitter is the spot to read the odd mashup of abbreviations and acronyms. So here is a list of just a few abbreviations and acronyms you must know! We categorized them into three sections.
Reduce your income taxes each year by taking advantage of the deductions available!
Medical & Dental Expenses.
These expenses in general are one of the largest expenses for retired people. Good news is that some of these expenses are deductible. If your expenses included health insurance premiums, long-term care insurance premiums, prescription drugs, nursing home care and other out of pocket health care expenses, they are deductible! But you need to itemize your deductions because there is a limit. People under the age of 65 the limit is 10% of your adjusted income. If you or your spouse is 65 and older then the limit is 7.5% until December 31, 2016.
Certain Medicare Premiums
Medicare Part A is not a medical expense. If you’re covered under social security you’re enrolled in Medicare Part A. If you’re not covered by social security you can voluntarily enroll in Medicare Part A and include the premiums you paid as a medical expense. Medicare Part B is a supplemental medical insurance and the premiums are a medical expense. Medicare Part D is a voluntary prescription drug insurance program and the premiums are a medical expense.
Medical Expenses Paid for Relatives
If certain requirements are met and you paid health premiums or uninsured medical expenses for a relative, its deductible. Generally you must pay over half of his or her support for the year.
Selling your House
If you lived in your main home for at least two of the five years before you sell your home the profit you make on the sale, up to $250,000 for single taxpayers and $500,00 for married taxpayers filing jointly is not taxable.
Retirement Plan Contributions
You can make deductible contributions to retirement plans such as IRAs. Those over 50 have higher contribution limits for tradition IRAs, Roth IRAs and 401(k)s. Retirees with their own businesses may also establish SEP-IRAs. Simple IRAs, Keogh plans and solo 401 ( K) plans that have higher contribution limits for those over 55.
If you give back to the community by making charitable contributions some of those contributions are deductible as itemized deductions, subject to limitations. Cash contributions of up to 50% of your adjusted income are deductible each year.
Source: Elder Law News Photo: Pexels
Rhonda A. Mannes,