Reminder: You Have Until Tomorrow to Lower Your Tax Bill With IRA Contributions

Tax procrastinators, the last friendly reminder of tax season. If you have an IRA and want a lower tax bill, you have until tomorrow, April 18th, to hide money in your traditional IRA.

If you have a traditional IRA ( as opposed to Roth ), you can deduct your contributions from taxable income for the year. The IRS gives you pre-tax day IRA deductions for the previous year. Since this day falls on April 18, 2017 this year, you have time to save money until tomorrow. Of course, this is not an option that everyone can afford, but if you were looking to spend a little on retirement anyway , this is worth considering.

It is assumed that you have not yet reached your 2016 contribution limits . As a rule, the limits for 2015, 2016 and 2017 cannot exceed:

  • $ 5,500 ( $ 6,500 if you’re 50 or older), or
  • your taxable benefit for the year if your benefit was less than this dollar limit.

It also assumes that you are eligible. There are income limits for withholding contributions, and if you reach these limits, your deferred tax credit will be phased out or eliminated altogether. Check out these income limits here , but you generally don’t get deducted if:

  • You are incorporated and your Modified Adjusted Gross Income is $ 118,000 or more.
  • You are single and your Modified Adjusted Gross Income is $ 71,000 or more.

Of course, now we come to the point, and this will be a last minute conclusion. And if you are transferring money from a bank account, it can take a few days, so call your financial firm to make sure your deposit is actually applicable. I spoke to Fidelity and they told me that if the transfer is triggered tomorrow when the end time is 11:59 pm ET, it will count towards 2016. You can also postmarked check before April 18, 2017 and this will count as well, just make sure the check says it’s 2016 contribution.

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