Tax Day itself isn’t the only deadline of income tax filing season.
Deadlines related to certain types of retirement plans also are looming, as the Internal Revenue Service recently reminded us.
We detail these deadlines below, but first let’s revisit Tax Day. Just in case you missed the memo, federal income taxes for 2016 are due on April 18, rather than the usual deadline of April 15.
The deadline for making individual retirement account (IRA) contributions for 2016 is April 18.
This means that if you have or want to open a traditional or Roth IRA, you have until then to take advantage of IRS contribution limits for 2016. For tax year 2016 as well as 2017, younger taxpayers can contribute up to $5,500. If you’re 50 or older, you can contribute $6,500.
Contributions to traditional IRAs are generally tax-deductible. Making a contribution before April 18 will help you not only maximize your retirement nest egg, but likely reduce your 2016 tax bill.
Additionally, contributing to either a traditional or Roth IRA might qualify you for the Saver’s Credit, which can also reduce your taxes. To learn more about this tax break for lower-income folks, check out “Tax Hacks 2017: Don’t Miss These 16 Often-Overlooked Tax Breaks.”
Confused about the two IRA types? Check out “Ask Stacy: Which Is Better — a Traditional or Roth Retirement Plan?”
Excess IRA contribution withdrawals
The deadline for withdrawing excess IRA contributions for 2016 is the due date of your tax return, including extensions.
This means that if you contributed more than the IRS allows to IRA accounts for 2016 — the $5,500 or $6,500 cap mentioned above — you have until your tax return due date to withdraw the excess amount from your IRAs.
Otherwise, Uncle Sam will penalize you — to the annual tune of 6 percent of the excess amount left in your IRAs.
Have you taken advantage of an IRA? Let us know below or over on our Facebook page.