The only tax deduction that can happen after December 31st of the year, is the good old faithful IRA. You can fund your IRA anytime before you file your tax return and if you go on extension, you have until the extension due date or your filing, whichever comes first to fund your IRA. IRA’s are not a fun or sexy deduction and so are often forgotten by taxpayers.
What is an IRA? An IRA is a personal savings plan that lets employees and the self-employed set money aside for retirement and can have tax advantages. Generally, eligible taxpayers can contribute up to $6,000 to an IRA for 2021. For those 50 years of age or older at the end of 2021, the limit is increased to $7,000. Qualified contributions to one or more traditional IRAs may be deductible up to the contribution limit or 100% of the taxpayer’s compensation, whichever is less. There is no longer a maximum age for making IRA contributions.
Questions? We have Pension Plan worksheets on our Resources page at www.wendybarlin.com