So for this month’s article, I decided to use myself as an example about why one should consider maxing out a traditional IRA before April 15.
Just like most of us who are busy preparing to file their taxes before or by April 15, last week I was doing the same. While preparing my tax forms, I realized that I would owe hundreds in taxes. Fortunately, since I work in the investment field, I knew instantly what to do. I thought why should I give my money to Uncle Sam when I can simply deposit the required amount into a traditional IRA and potentially get a deduction. Also, I was able to get another Traditional IRA set up for my wife and contributed the maximum allowed to it for 2018.
If you are reading this article and thinking about doing the same, make sure you speak with a tax specialist to ensure that you are eligible to claim a deduction on your Traditional IRA contribution.
Traditional IRAs can be beneficial depending on one’s income so visit www.irs.gov to see if you qualify. Again, keep in mind that circumstance varies from person to person, so you should always consult a tax professional in regards to IRA contributions and tax implications before making any decision.
At Wahed Invest, we have a team that will gladly assist you in setting up your Traditional IRA including ROTH, SEP and rolling over an old employer-sponsored retirement account. Visit wahedinvest.com to open up an account or contact us for more information about our online services.
To learn more Traditional IRA’s, click here:
- Retirement plan at work: Your deduction may be limited if you (or your spouse, if you are married) are covered by a retirement plan at work and your income exceeds certain levels.
- No retirement plan at work: Your deduction is allowed in full if you (and your spouse, if you are married) aren’t covered by a retirement plan at work.
These charts show the income range in which your deduction may be disallowed if you or your spouse participates in a retirement plan at work:
- IRA Deduction if You ARE Covered by a Retirement Plan at Work – 2019
- IRA Deduction if You Are NOT Covered by a Retirement Plan at Work – 2019 (deduction is limited only if your spouse IS covered by a retirement plan)
- IRA Deduction if You ARE Covered by a Retirement Plan at Work – 2018
- IRA Deduction if You Are NOT Covered by a Retirement Plan at Work – 2018 (deduction is limited only if your spouse IS covered by a retirement plan)
See Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), for additional information, including how to report your IRA contributions on your individual federal income tax return.